EU predicts three million migrant arrivals, sees economic boost

Latest Update: November 5, 2015 | 150 Views

BRUSSELS: Three million migrants are expected to arrive in Europe by 2017 as they flee war and poverty in Syria and other conflict zones, with a small positive impact on the EU economy likely, the EU’s executive arm said on Thursday.

A slight boost to the eurozone’s ongoing recovery from the huge influx of asylum seekers could help offset the growing hostility to migrants and political pressure over the issue, the European Commission said.

“Overall, an additional three million persons is assumed to arrive in the EU over the forecast period,” the European Commission’s economic forecast for 2015-2017 said, in its first assessment of the effect of the migrant crisis.

It predicted that there would be one million arrivals in total during 2015, soaring to 1.5 million in 2016 and then decreasing to half a million in 2017.

That would represent an 0.4 percent EU population increase once unsuccessful asylum applications were taken into account, it said.

European Union economic commissioner Pierre Moscovici said that the migrants could help boost the EU economy.

“There will be an impact on growth that is weak but positive for the EU as a whole, and that will increase GDP (Gross Domestic Product) by 0.2 to 0.3 percent by 2017,” Moscovici said.

“That will combat a certain number of received ideas and backs the politics of President (Jean-Claude) Juncker,” who has pushed for the EU to do more to help migrants, Moscovici added.

The migrant arrivals would create a short term boost to growth from higher government spending on new asylum seekers, the Commission said.

That would be followed by a medium-term boost because of an increase in the number of workers available “provided the right policies are in place to facilitate access to the labour market,” it said.

Generally, the eurozone economy is set to continue its moderate recovery over the next two years in the wake of the Greek bailout crisis, despite headwinds from the wider global economy, the Commission said.

Despite a slowdown in China and emerging markets hampering demand for eurozone exports, the 19-country single currency area is set to grow by 1.8 percent in 2016 and 1.9 percent in 2017, it said.

“Today’s economic forecast shows the euro area economy continuing its moderate recovery,” Valdis Dombrovskis, the European Commission Vice President in charge of the euro, said in a statement.

Low oil prices, a weaker euro exchange rate and the European Central Bank’s huge economic stimulus policy of so-called quantitative easing had all helped boost the eurozone in recent months, with the economy set to grow 1.6 percent in 2015.

But the former Latvian prime minister warned that it was important to keep up the pace of reforms across the eurozone, which was mired in recession for years in the wake of the global financial crisis.

“This is important, particularly against the backdrop of a slowing global economy, continuing tensions in our neighbourhood and the need to manage the refugee crisis decisively and collectively,” he said.

Greece remains a worry with the economy forecast to slip back into recession in 2015 following months of crisis over its bailout which resulted in capital controls that shut banks for weeks.

The Greek economy is predicted to remain in recession in 2016 but the new eurozone bailout programme agreed after tortuous negotiations in July is expected to bring a return to growth in 2017, it said.

Spain’s deficit is meanwhile likely to be higher than forecast even recently, adding to concerns that led Brussels last month to order Madrid to present a new budget that will be closer to EU rules.

The EU limit for deficits is 3.0 percent of gross domestic product but Spain’s is forecast to be 3.6 percent in 2016, higher than the 3.5 percent predicted only three weeks ago, the forecast said.

France’s troublesome deficit is meanwhile not expected to fall below three percent in 2017, adding to concerns over its repeated breaches of the EU’s fiscal targets.

The wider 28-nation EU’s economy is set to grow by 2.0 percent in 2016 to 2.1 percent in 2017, the forecast said.



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