Top 10 Richest Country In The World 2023? - CLT Livre

Top 10 Richest Country In The World 2023?

Top 10 Richest Country In The World 2023

Which country is the richest in Europe 2023?

Here is the full ranking of the richest countries in 2023, according to their per capita GDP. Luxembourg, one of the smallest countries in the EU has a population of 634,000 and is the richest country in this ranking with a per capita GDP of nearly $130,000.

Which country will be the richest in 2025?

Russia-Ukraine War Economic Impact – Analysis & Special Reports – See our latest analysis in the Resources section 1. Luxembourg: USD 143,203 per capita in 2025 We forecast Luxembourg to be the world’s wealthiest economy in 2025 in nominal GDP terms (at market exchange rates).

  1. Luxembourg’s economic success in recent decades is thanks to a booming services sector: The country is home to several important EU institutions and boasts a large financial sector thanks to a favorable tax regime.
  2. While the economy likely contracted last year due to Covid-19, it should return to a strong growth trajectory in the coming years and is set to expand well above the EU average, amid the continued dynamism of the services sector and strong population growth.

“Luxembourg is one of the world’s largest financial centres, due to renowned high skilled labour from the ‘Grande Region’ and infamous tax regulation. It is a worldwide leader in the investment fund industry with assets under management of over EUR4.1trn.

It is also the largest international private banking centre and the largest captive reinsurance centre in Europe. There are approximately 3,900 funds registered in Luxembourg. As of 2018, the number of banks in Luxembourg was 133, of which 40 are branches of foreign banks. Collectively, the banks hold assets of approximately EUR760bn.” – Katharina Koenz, economist at Oxford Economics 2.

Ireland: USD 112,769 per capita in 2025 In recent decades, Ireland has gone from being one of the poorest EU nations to one of the wealthiest, thanks to an export-oriented economic model and huge success in attracting FDI—particularly from large multinationals.

Ireland benefits from a favorable tax regime, a skilled, English-speaking workforce, a stable business environment and close ties to the U.S. Over our forecast horizon, Ireland is set to continue growing at a healthy clip, bolstered by strong inward migration and investment. However, extra trade frictions with the UK due to Brexit, and a potential reduction in the country’s tax competitiveness pose risks.

Moreover, interpreting national accounts data is made difficult by the large presence of multinationals in the country. “Calculating Ireland’s economic growth is complicated by the distortionary effects of balance-sheet movements of foreign multinational companies headquartered in Ireland.

These distortions mean that Ireland’s official GDP figures are an unreliable measure of domestic activity, while also being volatile and subject to frequent and substantial revisions. This is particularly acute in the external sector, where official export growth figures have increased during the pandemic, owing to large corporations’ balance-sheet movements.

The pharmachemical and technology firms that dominate Ireland’s multinational sector have thus far fared relatively well. This improved export performance, as well as increased government spending and a double-digit decline in imports, is estimated to have more than counterbalanced sharp declines in real private consumption and overall fixed investment.” – Economist Intelligence Unit 3.

  1. Switzerland: USD 96,788 per capita in 2025 Switzerland’s economy is supported by an extremely robust institutional framework, a stable and conducive business environment, and an extremely high-performing education system.
  2. The country also boasts a strong industrial base and a convenient location at the heart of Europe’s largest national markets.

Switzerland weathered the Covid-19 crisis fairly well, thanks to generous state support and generally laxer restrictions than other nations. Looking forward, the economy is seen returning to a solid—if unspectacular—growth trajectory, although disagreements with the EU over the bilateral relationship and exposure to external shocks pose risks.

  • Compared to the situation at the end of 2019, the level of activity in Switzerland at the end of the third quarter was well above that of its European neighbours,
  • For 2020 as a whole, we forecast a contraction of 3.2% of GDP.
  • The recovery in 2021 should be solid, mainly in the second half of the year once the Covid vaccine eliminates any risk of a third wave of the pandemic.

We expect growth of 3.1% for the year 2021 as a whole.” – Charlotte de Montpellier, economist at ING 4. Norway: USD 95,165 per capita The discovery of oil and gas in the North Sea in the 1960s transformed Norway’s economy, with the government subsequently building the world’s largest sovereign wealth fund—today valued at over USD 1 trillion—on the back of this natural resource wealth.

Today, energy is still a key component of the economy, although the services sector is by far the largest economic sector at over 60% of GDP. Norway was less affected by Covid-19 than other European economies, and is set to return to growth from 2021 onwards thanks to higher oil prices and rebounding domestic demand.

“We expect the domestic Norwegian economy to be in position for a strong rebound, Household incomes have kept up well during the pandemic, in large part thanks to generous unemployment support from the government. Consumer spending fell last year as households cut back on travel and services.

  • But consumer confidence is good, consumption of goods remains strong, and the housing market is booming.
  • We therefore believe that underlying consumer demand is strong and will contribute significantly to the economic recovery once restrictions are lifted.
  • Businesses are also benefitting from generous government support, which has prevented any rise in bankruptcies.

Moreover, temporary tax changes for the oil industry have spurred companies’ investment plans and prevented a bigger decline in activity in the sector.” – Analysts at Swedbank 5. Denmark: USD 78,068 per capita The economy’s high standard of living can be traced to effective governance, elevated human capital and a conducive business environment.

Denmark has a developed services sector, is a net exporter of food and boasts a burgeoning renewable energy industry as part of the government’s goal to go carbon neutral by 2050. Despite taking a knock in 2020 from the coronavirus pandemic, the economy should resume a robust growth trajectory over our forecast horizon, buttressed by favorable demographics and healthy consumption and investment.

That said, elevated household debt is a risk. “We have recently revised our population forecasts, taking into consideration stronger inflows of migrants and labour force reforms that will see the pension age increase from 65 to 67 by 2022. This has helped raise the potential of the Danish economy, and the new government’s plan to be more welcoming of skilled immigration should help further.

  • A rising participation rate, particularly among older workers, is the main factor behind the increased contribution of equilibrium employment to potential output growth.
  • This should facilitate higher potential growth.” – Rory Fennessy, economist at Oxford Economics 6.
  • United States: USD 77,653 per capita A leading position in many cutting-edge technological fields, deep capital markets, a flexible labor market and strong rule of law are all factors which make the United States one of the richest countries in the world in GDP per capita terms.

These same factors should continue to support the economy over the next several years and ensure the U.S. remains among the world’s wealthiest nations, while vast fiscal stimulus should provide a further boost. However, a bitterly divided political panorama, elevated debt levels, sharp socioeconomic inequalities and China tensions all cloud the outlook.

  • The diversity, dynamism, and competitiveness of the U.S.
  • Economy, along with the U.S.
  • Dollar’s status as the preeminent international reserve currency and very large size and depth of the U.S.
  • Treasury market, will continue to offset rising fiscal pressures.
  • However, the U.S.’ fiscal strength is deteriorating and that deterioration is expected to accelerate over time as higher ageing-related entitlement spending, debt service payments and relatively weaker government revenues drive persistent fiscal deficits.

Diminishing confidence that U.S. policymakers will take effective action in the coming years to reduce federal government budget deficits and the ongoing rise of the debt burden would signal erosion of both fiscal and institutional strength.” – Analysts at Moody’s 7.

  1. Singapore: USD 75,250 per capita Upon expulsion from Malaysia in 1965, the nascent independent republic of Singapore was a tiny third-world country, with no natural resources and simmering ethnic tensions.
  2. Fast forward half a century, and Singapore is now among the world’s richest nations in per capita terms, thanks to decades of export-oriented growth which saw heavy investments in physical and human capital and the creation of a world-class business environment.

While Singapore was relatively hard-hit in 2020 by Covid-19 due to the economy’s open nature, economic activity should recover swiftly from 2021 onwards, with growth expected to be notably faster than most other developed economies over our forecast horizon, aided by the government’s focus on long-term policymaking.

  1. However, further deglobalization and a rapid slowdown in labor force growth pose risks to the outlook.
  2. The Budget will aim to build three enablers, (1) promoting innovation and collaboration on a global scale, (2) providing capital to businesses, and (3) developing workers’ skills, talents and creativity.

More clarity on Singapore Green Plan 2030 is seen as well The Covid-19 pandemic has prompted significant global shifts on the economic and social fronts, accelerated technological advances and created new global domains for competition and cooperation.

What is the top 50 richest country?

Top 50 richest countries in the world based on GDP per capita

S/N Country Population Size
1 Luxembourg 655,489
2 Bermuda 64,055
3 Ireland 5,101,817
4 Switzerland 8,842,605

Which country will be rich in 2030?

From Good to Great

Rank Country Proj. GDP (2030, PPP)
#1 China $64.2 trillion
#2 India $46.3 trillion
#3 United States $31.0 trillion
#4 Indonesia $10.1 trillion

Which country is richest in Europe?

Denmark, the sixth-wealthiest country in Europe – Denmark has a per capita GDP of $66,390 (IMF, 2023), making it the sixth-richest country in Europe. The country is famous for its strong welfare state, with a focus on education, healthcare, and social welfare.

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What is the poorest country in the EU 2023?

Poorest Countries in Europe – The ten poorest countries in Europe, based on GNI per capita, are Ukraine, Moldova, Albania, Republic of Macedonia, Bosnia and Herzegovina, Belarus, Serbia, Montenegro, Bulgaria, and Russia. Among the poorest countries in Europe, Ukraine ranks as the poorest with a GNI per capita of $3,540.

Moldova follows closely behind in the second position with a GNI per capita of $4,570. Albania is the third poorest European country, with a GNI per capita of $5,210. The Republic of Macedonia comes in fourth place, with a GNI per capita of $5,720. Bosnia and Herzegovina ranks fifth, with a GNI per capita of $6,090.

Belarus is the sixth poorest country in Europe, with a GNI per capita of $6,330. Serbia follows in the seventh position, with a GNI per capita of $7,400. Montenegro ranks eighth poorest country in Europe, with a GNI per capita of $7,900. Bulgaria holds the ninth position, with a GNI per capita of $9,540.

  1. Finally, Russia completes the list of the ten poorest countries in Europe, with a GNI per capita of $10,690.
  2. The ten poorest European countries, ranked by GNI, are : 1.
  3. Ukraine – $3,540 2.
  4. Moldova – $4,570 3.
  5. Albania – $5,210 4.
  6. Republic of Macedonia – $5,720 5.
  7. Bosnia and Herzegovina – $6,090 6.
  8. Belarus – $6,330 7.

Serbia – $7,400 8. Montenegro – $7,900 9. Bulgaria – $9,540 10. Russia – $10,690

What is the best EU country to live in 2023?

Europe is a coveted destination for expats due to its diverse cultures, history, and high standard of living. However, the prospect of moving to a new country can be both exciting and intimidating. Here are the 10 best countries in Europe for expats Get more rules and restrictions in 200 countries Click here Are you planning to move to one of the European countries, but don’t know which one to choose? The most honest reviews can only be obtained from people who already have experience living abroad.

  • Every year, the global expat community InterNations conducts an Expat Insider survey to select the best countries to move to.12,000 respondents representing 171 nationalities and living in 172 countries of the world participate in it.
  • They appreciate the ease of settlement, the ease of finding a job abroad, and the quality of leisure time in the country where they live.

The ranking also includes data from the Expat Essentials index, which analyzes the quality of digital services, bureaucracy, housing and ease of language learning. Based on the collected data, InterNations creates a ranking of the best countries in the world for expats.

Which European countries became leaders in 2023? Let’s talk further. Read about the 5 best countries to move to for retirement here, USA or Canada for expats : which country is better to migrate to in 2023? Expat City Ranking 2023: the best and worst cities for expats in the world – find here, ● 1st place – Spain In 2023, Spain was ranked as the best country in Europe and second in the world for expats.

High quality of life, career prospects and friendly local population attract many expats to the state. Most of the respondents noted that the country maintains an ideal balance between work and private life.88% of migrants are impressed by Spain’s culture, as well as the many opportunities for sports and nightlife.

New residents especially like the local climate, because there are many sunny days and mild winters. ● 2nd place – Portugal Portugal remains one of the few European countries that manages to maintain a balance between a high quality of life (the country ranks seventh in the world) and its moderate cost.

In addition, the country is recognized as an ideal place for young people and remote workers to relocate. More than three-quarters of respondents feel at home here, and 80% of people note that most local residents welcome foreign residents. However, Portuguese bureaucracy can be difficult for expats to deal with.

  1. Foreigners also note that career prospects in the country are not very high, but 78% of expats say that their income from remote work is quite enough for a comfortable life in Portugal.
  2. 3rd place – Finland For five years in a row, Finland has been awarded the title of the happiest country in the world, because it has an excellent free public health care system and quality education.

The country also has a low crime rate and good ecology. All these factors make Finland the best place in Europe to live with a family. Finns are also quite tolerant, this fact helps expats representing the LGBT community to move here. In Finland, foreigners can count on a high level of wages and career prospects.

4th place – Luxembourg Luxembourg is one of the smallest countries in Europe with the highest quality of life. The state offers expats career prospects, as well as interesting leisure time. Many international companies and organizations work in Luxembourg, as well as a fairly strong financial sector.

A low level of corruption and favorable tax conditions allow business to actively develop in the state. ● 5th place – Czech Republic 80% of expats note that they are very satisfied with the balance between work and personal life in the Czech Republic.

  • Also, foreigners often occupy leading positions in the country.
  • Most of the respondents noted the high level of salaries in the Czech Republic.
  • The crime rate in the country is low.
  • Foreigners also like the well-developed Czech infrastructure and transport connections.
  • The cost of living is quite acceptable, compared to the countries of Western Europe.

● 6th place – Netherlands The Netherlands offers expats a high quality of life with low crime and friendly locals. The country promotes a healthy work-life balance. In general, the Dutch are welcoming to foreigners and make an effort to welcome newcomers into the community.

  1. They are also known for their liberal society.
  2. The Dutch have the world’s highest level of English proficiency among non-native speakers, so English-speaking expats will have a much easier time here.
  3. 7th place – Switzerland Life in Switzerland for expats is usually prosperous and comfortable.
  4. Swiss residents earn the fourth highest average salary in the world, and expats earn even higher.

The state also has a low unemployment rate and a universal health care system. Switzerland is known for its political stability, neutrality and low level of violent crime. For a relatively small country, Switzerland has an amazing variety of natural and cultural attractions, including 13 UNESCO World Heritage Sites.

  • 8th place – Greece Greece is an extremely lively country, which is famous all over the world for its climate, rich history, beautiful architecture and unique culture.
  • Greece is a very safe place, with a low crime rate.
  • Also, the country has the lowest cost of living in the European Union, and the standard of living is high.

● 9th place – Iceland With its stunning natural scenery, minimal red tape and excellent quality of life, Iceland is the ideal European country for expats. Glaciers, waterfalls, geysers and hot springs – all these wonders are the hallmark of the country.

  1. The economy is another good reason why Iceland is a good choice for expats.
  2. This friendly country has a stable currency and low unemployment.
  3. 10th place – Germany Germany provides its citizens and foreign residents with a high quality of life and economic stability.
  4. Therefore, it is not surprising that the largest number of expats in Europe live in Germany.

There are many employment opportunities in the state, especially for highly qualified workers. At first glance, Germans are direct, diligent and maybe even a little cold, but this is not entirely true. Many of them are interesting, artistic and very friendly people.

Finding the perfect place for migration and moving abroad can be quite exciting, because it involves many components: finding housing, work, settling all bureaucratic aspects, moving things. However, probably the most important stage of preparation is the execution of an international health insurance policy, because it is the guarantee of a safe and peaceful stay in any country of the world.

When choosing protection, contact only verified insurance agents, Photo: GETTY Products from Visit World for a comfortable trip: Medical insurance all over the world; Legal advice from a local specialist on visa and migration issues (to receive the service, select the country of interest and citizenship).

Which country will be richest in 2050?

Projections and Highlights for 2050

Rank Country Real GDP in 2050 (USD trillions)
1 🇨🇳 China $41.9
2 🇺🇸 US $37.2
3 🇮🇳 India $22.2
4 🇮🇩 Indonesia $6.3

Who is the top 10 powerful country?

Top 10 powerful countries in the world 2023

Power Rank & Country GDP (as of July 2023) Population*
#1 United States $26.85 trillion 339 million
#2 China $19.37 trillion 1.42 billion
#3 Russia $2.06 trillion 144 million
#4 Germany $4.32 trillion 83.3 million

Who will be the strongest country in 2050?

The Most Powerful Countries in 2050 – According to a by PwC, the world will be strikingly different in 2050 from how it is today. The global economy is projected to double in size, with the U.S. and Europe losing ground to China and India. Economic power is likely to shift to the Emerging 7, or E7 economies, which in 1995, were half the size of the advanced G7 economies.

  • By 2015, both were relatively equal in size.
  • In 2040 and onwards, E7 economies could be double the size of G7.
  • Relatively smaller economies like Nigeria, Vietnam, and the Philippines are also expected to experience huge leaps in their economic rankings over the next 25 years.
  • The United States is the undisputed superpower currently, but by 2050, the world order is likely to turn multipolar, with China and India having a greater role in shaping global affairs.

China is tipped to become the, holding a 20% share of the world’s GDP in terms of purchasing power parity. So its safe to say that China will be economically the most powerful country in the world in 2050, China is also expanding its political and economic influence in other regions of the world, while the US is receding.

You can read more about China’s growing footprint in Africa in our list of the, India will claim second spot, overtaking the United States which will fall to third position. Indonesia, Brazil, Mexico, and Nigeria are other countries that are likely to grow in power. Economic strength is expected to reflect in military power as well.

Chinese President Xi Jinping has already made clear his ambitions of setting the People’s Liberation Army (PLA) on track to become the world’s strongest military by 2050. However, challenges await countries like China and India in their quest to become the so-called superpowers in 2050,

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What are the 25 poorest country in the world?

List of Poorest Countries in the World

# Country Gini Coefficient
1 Burundi 38.6
2 Somalia 36.8
3 Mozambique 54
4 Central African Republic 56.2

Which country is no 1 in richest?

Which is the richest country in the World? – As of 3rd September 2023, United States of America (USA) stands on the first position on the list of Richest Country in the world with the GDP of $26,854 B.

What are the 50 poorest country in the world?

The poorest countries in the world

Country/Region Adjusted GNI/capita HDI
Gambia 2,420 $ 0.500
Guinea 2,455 $ 0.465
Mali 2,568 $ 0.428
Burkina Faso 2,568 $ 0.449

Which European country has the best future?

10. Germany – GDP per capita, Purchasing Power Parity in 2021: $57,927.6 Germany is the leading economic power in Europe and many of the countries’ top corporations are highly innovative such as BMW and Volkswagen. As a result of its future economic growth, its innovative companies, and its 2021 GDP per capita, PPP of almost $58,000, Germany will be a great place to live in the future.

Which will be the richest country in 2040?

Top 10 GDP Countries 2000-2050

2050 Rank 2040 GDP
1 CHN 26439
* EU 28323
2 USA 27229
3 IND 12367

What is the poorest country in 2050?

Published: Wednesday 19 September 2018 – If the trend of population growth continues, the number of poor people in the world, which is currently falling, may rise. Credit:Wikipedia The poorest places in the world, where leading a healthy and productive life is already very tough, are making more and more babies and, in turn, creating tougher living conditions for themselves, says the Bill and Melinda Gates Foundation’s second Goalkeepers report,

  • They also fear that if the trend continues, the number of poor people in world, which is currently falling, may rise.
  • While more than a billion people have been pulled out of poverty in the world, this success is not everyone’s.
  • This change came first in China and then in India.
  • Since Asia achieved most of the success, “extreme poverty is becoming heavily concentrated in sub-Saharan African countries”.

“By 2050, that’s where 86 percent of the extremely poor people in the world are projected to live,” says the report while suggesting that for the next three decades, the world’s top priority should be reducing poverty in Africa. A major contributor is Africa’s rising population, which is projected to double by 2050.

  1. This means that even if the percentage of poor people is reduced to half, the number would be the same.
  2. Even within Africa, there is good news and bad news.
  3. Good is that many countries are turning a corner, like Ethiopia, which was majorly struck by famine, will be able to eliminate poverty by 2050.
  4. Bad that poverty is concentrated in a handful of African countries.

“By 2050, for example, more than 40 percent of the extremely poor people in the world will live in just two countries: Democratic Republic of the Congo and Nigeria. Even within these countries, poverty is concentrated in certain areas,” says the report.

  • The reasons for this high concentration of poverty are rooted in violence, political instability, gender inequality, severe climate change, and other deep-seated crises.
  • That’s not all.
  • Other possible causes are high rates of child mortality and malnutrition.
  • The Gate Foundation suggests that the best way out of this is continuing to improve human condition by “creating opportunities in Africa’s fastest growing and poorest countries”.

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Who is richer Belgium or Netherlands?

In the top 10 EU countries, the Dutchman is the richest. This is what emerges from our study. At the end of 2021, the average financial wealth per individual in the Netherlands was 176,510 euros, more than 4.5 times the lowest score in Portugal. Belgium ranks second with 121,000 euros.

  • Johan Geeroms, our Risk Underwriting Benelux Director, explains “For the main European countries, we examined what has happened to the average financial wealth of individuals over the past ten years.
  • How much has it increased? And what is the main reason for that? In doing so, we look at savings, investments and pension money.” Which means the value of real estate minus mortgage debt was not included.

With that criterion, Belgium could have scored even higher, for example, because 72% of Belgians own their own home, and about 850,000 Belgians also own two or more homes. Figures from the National Bank of Belgium show that Belgians will own more than 1,741 billion euros in real estate in 2021.

  • The general conclusion regarding financial wealth is that the Dutch are the richest, and their wealth has also risen the fastest on average over the past ten years, namely by 7,230 euros per year.
  • No other European country in the top 10 has its wealth distributed so well across income classes.
  • In Belgium, assets have already increased by an average of 3,830 euros and in Germany, by 3,840 euros.

Johan Geeroms explains that assets can grow in different ways. “Interest rates have circled around zero for a long time, but if people keep putting aside a lot of savings, the wealth will grow considerably. The Belgians are traditional savers, but so are the Germans and the Dutch.

Those savings were also used much more often for investments, which has yielded good returns in recent years. The Dutch and Finns already achieve the highest returns on their investments. More than two-thirds of their wealth growth was due to appreciation; in Germany, it was less than a quarter. They do not have to use income to achieve their savings objectives; they do that through investments.” Germany has always been a saving champion, and our research confirms this.

For example, German households saved the highest average amount per year between 2012 and 2021: 2,900 euros. Households in the Netherlands (2,210 euros), France (1,790 euros) and Belgium (1,740 euros) also set aside an above-average amount. At the bottom of the scale, we find southern European households: Italy (920 euros), Spain (580 euros) and Portugal (450 euros).

What is the Netherlands economy ranked in Europe?

The Netherlands has fourth-highest GDP per capita in Europe.

Is Europe richer than America?

Americans are generally richer than Europeans Around the 4th of July, there’s always a big Twitter fight between Americans and Europeans online over which place has higher living standards. In terms of good old per capita GDP, it’s not much of a contest: Switzerland has higher per capita income than the U.S., but the U.S.

comes out ahead of the Northern European countries — Sweden, Germany, Denmark, and the Netherlands — and well ahead of other European countries like France. (The EU itself is even lower because it includes East Europe.) In fact, in per capita GDP terms, the state of Arkansas — the second-poorest U.S.

state — is actually about as rich as the United Kingdom, and Georgia — the median U.S. state — is richer than Denmark. But as many people on Twitter will be quick to tell you, per capita GDP isn’t the be-all and end-all measure of living standards. After all, isn’t Europe far more economically equal? Doesn’t the government provide a lot of things for free that Americans have to pay for out of pocket? Isn’t the health care better? Don’t Europeans get much more vacation? And on top of all that, many people who travel to Europe, or who have lived in both places, insist that life in Europe just feels nicer.

  • Well, it turns out that both the America boosters and the Europe partisans have good points.
  • By almost any economic statistic we can find, Americans tend to enjoy higher material standards of living than their European counterparts.
  • But when it comes to quality-of-life measures that aren’t included in GDP, Europe tends to come out ahead.

: Americans are generally richer than Europeans

What will European countries economic growth be in 2023?

Spring 2023 Economic Forecast: an improved outlook amid persistent challenges Over the past winter, the EU economy performed better than expected. As the disruptions caused by the war in Ukraine and the energy crisis clouded the outlook for the EU economy, and monetary authorities around the world embarked on a forceful tightening of monetary conditions, a winter recession in the EU appeared inevitable last year.

The Autumn 2022 Forecast had projected the EU economy to contract in the last quarter of 2022 and the first quarter of 2023. Instead, latest data point to a smaller-than-projected contraction in the final quarter of last year and positive growth in the first quarter of this year. The better starting position lifts the growth outlook for the EU economy for 2023 and marginally for 2024.

Compared to the Winter 2023 interim Forecast, EU GDP growth is revised up to 1.0% in 2023 (from 0.8%) and 1.7% in 2024 (from 1.6%), virtually closing the gap with potential output by the end of the forecast horizon (see Special Issue I.4.1). Upward revisions for the euro area are of a similar magnitude, with GDP growth now expected at 1.1% and 1.6% in 2023 and 2024 respectively.

  • Inflation also surprised again to the upside, and it is now expected at 5.8% in 2023 and 2.8% in 2024 in the euro area, respectively 0.2% and 0.3% higher than in winter.
  • Model-based analysis suggests that the improved outlook is driven by the terms-of-trade countershock caused by declining energy prices, while broad price-increasing supply-side factors lead to inflation persistence (see Box I.2.4).

Recent economic developments seem to corroborate these results. According to Eurostat’s preliminary flash estimate, in 2023-Q1 GDP grew by 0.3% in the EU and by 0.1% in the euro area, a notch above the Winter interim Forecast projections. Lower energy prices, abating supply constraints, improved business confidence and a strong labour market underpinned this positive outcome.

  1. As for inflation, the headline index continued to decline in the first quarter of 2023, amid sharp deceleration of energy prices, but core inflation firmed, pointing to persistence of price pressures.
  2. For the second quarter, survey indicators suggest continued expansion, with services clearly outperforming the manufacturing sector and consumer confidence continuing its recovery from last autumn’s historical low.

The EU weathered the energy crisis well thanks to the rapid diversification of supply and a sizeable fall in consumption (see Box I.2.1). As the EU approaches the gas-refilling season, gas storage levels are at comfortable levels and risks of shortages during next winter have considerably abated.

Further supply diversification and the accelerated increase in renewable power generation are expected to allow the EU to continue replacing fossil-based sources, including gas, while reducing the likelihood of renewed price pressures. At the cut-off date of this forecast, wholesale gas prices were projected to be 25% and 13% lower in 2023 and 2024 respectively, compared to markets’ expectations at the time of the previous Commission forecast.

Oil prices were also expected to be 10% lower, compared to early February, in both 2023 and 2024. The sharp deterioration of terms of trade in 2021 and 2022, as energy (imported) prices surged, resulted in a transfer of purchasing power from the EU to the rest of the world.

  1. With energy prices rapidly falling, the expected improvement in terms of trade over the forecast horizon will drive a reversal of this effect, to the benefit of all domestic sectors of the economy – households, corporates and governments.
  2. So far, households and public finances have taken a large part of the brunt of high imported inflation, as employment growth only partially offsets the fall in real wages and public finances set out to protect households and corporations from the adverse impact of high energy prices.
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Companies have been generally successful in passing on higher production costs to consumers (see Box I.2.3). However, the most energy-intensive sectors and companies have been struggling. Going forward, households are set to see their real disposable incomes finally increase in 2024, while falling energy prices allow governments to contain the cost of support measures or phase them out altogether.

  • The progressive firming of core inflation has set EU monetary authorities on a path of more forceful monetary tightening.
  • In its meeting of 5 May – i.e.
  • Shortly after the cut-off of this forecast – the ECB Governing Board lifted policy rates by 25 basis points, down from 50 basis points in the previous two rounds of policy hikes.

This was largely anticipated by market agents. At the cut-off date of this forecast, the euro area short-term rate was expected to peak at 3.8% in 2023-Q3, before abating in the course of 2024. Long-term interest rates have hardly moved. Tighter monetary conditions are feeding through the credit channel: borrowing costs are increasing, while credit flows are decreasing.

The collapse of Silicon Valley Bank and two other US banks and the problems with Credit Suisse compound with the effects of higher policy rates. While well-capitalised and thoroughly supervised, EU banks’ declining risk tolerance is expected to lead to a further tightening of lending standards. As usual, projections about interest rates underpinning this forecast reflect market expectations at the time of the forecast.

Moreover, this forecast assumes an orderly adjustment of the financial sector to higher policy rates, while risks stemming from exposures to households and corporates are assumed to be manageable (see Box I.1.1). While bankruptcies increased significantly towards the end of last year, the surge largely reflects a clearing of the insolvency backlog created by support schemes during the pandemic and country-specific developments related to changes in insolvency regulations (see Box I.2.2).

  1. The tightening of financing conditions is expected to weigh on investment over the forecast horizon.
  2. Housing investment, which is particularly sensitive to interest rates, is set to contract.
  3. By contrast, business investment is projected to still increase, though at a slower pace than last year, helped by corporates’ overall healthy balance sheet position.

Finally, public investment is forecast to remain buoyant in both 2023 and 2024 thanks to the continued deployment of the Recovery and Resilience Facility (RRF). Overall, investment growth is projected to decelerate markedly from 4% in 2022 to 0.9% in 2023.

Gradual normalisation of economic activity is expected to reinvigorate companies’ investment decisions, pushing overall investment growth up by 2.1% in 2024. Inflation keeps eroding the purchasing power of consumers. Following the fall in the last quarter of 2022, private consumption is expected to have weakened again in the first quarter of this year.

Overall, private consumption growth in the EU in 2023 is projected at 0.5%. As inflation loosens its grip on households’ budgets, private consumption is set to rebound to 1.8% in 2024. The household saving rate is projected to decrease in the EU from 13.2% in 2022 to 12.8% in 2024, in line with its long-term average.

The slower pace of economic expansion in the EU is set to have a limited impact on the EU labour market. Continued labour market tightness, labour hoarding due to skill shortages as well as strong demand, especially for services, are expected to cushion the impact of the economic slowdown on the labour market.

Employment growth is still forecast at 0.5% in the EU this year. In 2024, employment is set to keep growing moderately (0.4%), implying a less job-rich growth than in 2022. The unemployment rate is expected to remain close to its historical low, at 6.2%, in the EU in 2023, before edging down to 6.1% in 2024.

After growing by 5.0% in 2022, the annual growth rate of compensation per employee is projected to increase to 5.9% in 2023 before falling to 4.6% in 2024. This means that real wages are still set to decrease this year, though a slight pick-up in real wages is expected towards the end of the year. Sharply lower natural gas prices are making their way to retail prices of gas and electricity, though at varying speeds across EU Member States.

At the same time, all other major inflation subcomponents (processed and unprocessed food, non-energy industrial goods and services) have seen their annual inflation rate increase between December and March. Consequently, core inflation (headline excluding energy and unprocessed food) continued to rise in early 2023, to a historical high of 7.6% in March, and core goods and services replaced energy as the primary driver of headline inflation in the EU.

  1. Recent indications on managers’ selling price expectations from business surveys and other indicators corroborate the projection of core inflation having peaked in the first quarter.
  2. Core inflation is projected to decline gradually as profit margins absorb higher wage pressures and tighter financing conditions prove effective.

Average core inflation in 2023, at 6.9% in the EU, is set to exceed that in 2022, before falling to 3.6% in 2024, above headline inflation in both forecast years. The economic expansion and reduced pandemic-related emergency measures supported the further reduction of the EU government deficit in 2022, to 3.4% of GDP, despite the expansionary fiscal stance driven by sizeable energy support measures.

In 2023 and especially in 2024, the phasing out of energy support measures is expected to drive further deficit reductions on aggregate in the EU, to 3.1% and 2.4% of GDP, respectively, and the corresponding fiscal impulse should turn contractionary. However, several Member States are still projected to see a deterioration in their general government balance in 2023, as their fiscal stance remains expansionary.

While falling energy prices are helping to contain the cost of existing support measures, several Member States have introduced new energy support measures or are extending existing ones. Furthermore, while inflation supported the improvement in the government balance ratio in 2022, some reversal of this effect is expected in 2023 as large expenditure items like pensions and other social transfers, as well as public wages, are adjusted to the previous’ year inflation.

In 2024, on account of unchanged policies, the deficit reduction is set to be broad-based across countries. Meanwhile, the EU aggregate debt ratio is expected to fall in 2023-24 despite debt-increasing primary deficits, thanks to economic growth and inflation. Higher interest rates are affecting the cost of servicing public debts only gradually thanks to their long maturity.

The EU debt-to-GDP ratio fell to around 85% of GDP in 2022, from the record high of 92% recorded in 2020. It is projected to further decline to below 83% of GDP in 2024, but to remain above the pre-COVID-19 crisis level of around 79% in 2019. Global growth, excluding the EU, is expected to fall from 3.2% in 2022 to 3.1% in 2023, before rising back to 3.2% in 2024, broadly unchanged since the Winter interim Forecast.

The outlook for external demand facing the EU has however been significantly downgraded, as synchronised weakness in advanced economies (and especially in the US) weighs heavily on EU exports. The rebound in economic activity in China, moreover, is set to benefit primarily the domestic sectors, services in particular, with limited positive spillovers to the EU.

Still, net external demand is expected to contribute positively to GDP due to weak import dynamics – especially for goods in 2023. The current account balance is set to improve steadily from the record-low surplus of 1.6% of GDP in 2022 to 3.5% in 2024.

The improvement is mainly driven by the merchandise trade balance, which is forecast to turn positive this year and improve further next year, largely as a consequence of falling import prices. The services trade balance is forecast to remain strong throughout the forecast horizon, with tourism being a strong driver of the economic rebound.

This publication includes for the first time an overview of the economic structural features, recent performance and outlook for Ukraine, Moldova and Bosnia and Herzegovina, which were granted candidate status for EU membership by the Council in June 2022 and December 2022 (see Special Issue I.4.2).

  1. While the outlook in our central scenario has not changed much since last winter, downside risks to the economic outlook have increased.
  2. Persistence of core inflation has emerged as a key risk.
  3. It could continue restraining the purchasing power of households and force a stronger response of monetary policy, with broad macro-financial ramifications.

Moreover, a surge in risk aversion in financial markets, following the banking sector turmoil originated in the US, could prompt a more pronounced tightening of lending standards than assumed in this forecast. In this context, policy consistency has become even more important.

An expansionary fiscal policy stance would fuel inflation further, leaning against monetary policy action. In energy markets, the threat of outright supply shortages for next winter has significantly abated, but the evolution of prices remains highly uncertain. More benign developments in energy prices would lead to a faster decline in headline inflation, with positive spillovers on domestic demand.

Risks related to EU’s external environment remain unusually elevated, with new uncertainties following the banking sector turbulence or related to wider geopolitical tensions. Finally, there is persistent uncertainty stemming from Russia’s ongoing invasion of Ukraine.