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The EU's economy is set to grow by 0.9 percent this year, according to forecasts. (Archive photo). Photo: Yves Herman/Reuters

Red Sea dispute affects EU growth forecast

The European Union’s economy is projected to grow at a rate of 0.9 percent in 2024, a downgrade from the previously forecasted 1.3 percent. The EU Commission’s winter forecast attributes this revision to geopolitical tensions centered around the Red Sea, a critical global trade hub affected by recent attacks on shipping, causing many shipping companies to cease operations there. Further trade disruptions could increase price pressures, the report states. The EU economy is entering 2024 on weaker footing, after narrowly avoiding a technical recession, which denotes two consecutive quarters of economic downturn, in the second half of 2023. The forecast for the Danish economy mirrors the broader EU projection at 0.9 percent growth. Allan Sørensen of Dansk Industri anticipates a soft landing for the Danish economy with low growth and a slight decline in employment, but a return to more normal levels of inflation.