Written by Staff Writer
NEW YORK (CNNMoney) — Europe’s economic growth prospects are looking brighter but the problem of soaring crude oil prices could derail that recovery.
The European Commission, an institution that reports on economic policy for the 28 countries of the European Union, published a revised economic forecast for 2020 on Wednesday. It predicts that GDP will grow by 2.6% in the region, up from the previous forecast of 2.4%.
The Commission expects the euro zone economy to expand by 1.3% in 2015 — in line with previous estimates but stronger than the 0.5% growth that was expected three months ago.
But stronger than expected growth could be undermined by the increasing geopolitical tensions in the Middle East and the power struggle between Russia and Ukraine.
That could send prices soaring for oil, hurting Europe’s already feeble economic recovery.
In addition, the recovery could face some headwinds from the continued falling of the value of the euro against the dollar. That could hurt European exports.
There were some positive signs in the report. Consumer spending has been improving, and unemployment has fallen to 9.4%, an all-time low. The Commission expects jobs to be created in most of the eurozone in the next decade.
But the forecast is for job losses to continue to be concentrated in large regional economies such as Italy and France.
High unemployment is a continued barrier to the region’s economic recovery, and even though the jobless rate in the euro zone is now down from 11.5% two years ago, it’s still very high.
European employment is currently around 13% of the entire workforce, significantly below the overall level of 17% in the United States.
Efforts to create new jobs could include further boosting the region’s public and private investment, such as through improving infrastructure.