RegionsEEAEC Warns Eurozone Recession Will Extend into 2013

EC Warns Eurozone Recession Will Extend into 2013

The European Commission (EC), which last November predicted that the eurozone’s 17 member countries would edge back into 0.1% economic growth this year, said it now expects the recession to extend into 2013 with a -0.3% contraction following the -0.6% shrinkage in 2012.

However, the EC remains more optimistic in its winter economic forecast on prospects for 2014 when it expects the eurozone to recover and achieve 1.4% growth.

For this year, the EC has downgraded Europe’s two biggest economies and is now pencilling in 0.5% growth for Germany’s economy and a minimal 0.1% increase for France. However, its projection sees this being undermined by a -1% contraction for Italy and -1.4% for Spain.

The Greek economy will see its sixth year of economic contraction, after figures of -7.1% in 2011 and -6.4% last year. The EC, which last November was forecasting a -4.2% contraction for Greece in 2013, now expects the figure to be -4.4%

Unemployment in the eurozone is also expected to rise, from 11.4% in 2012 to 12.2%, which would take the jobless total to more than 20 million. The Greek jobless rate is projected as increasing from 24.7% to 27%, while Spain will be close behind at 26.9%.

“The weakness of economic activity towards the end of 2012 implies a low starting point for the current year,” said Olli Rehn, the European Union’s economic affairs commissioner, in a statement. “The current situation can summarised like this: we have disappointing hard data from the end of last year, some more encouraging soft data in the recent past and growing investor confidence in the future.”

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