EC downbeat on European economic growth prospects
The European Commission said on November 7, in its autumn economic forecast, that it expected the bloc’s economy to shrink by 0.3 per cent this year, before returning to moderate growth in 2013 and showing stronger signs of recovery in 2014.
The EC projected the economy expanding by 0.4 per cent next year and 1.6 per cent in 2014. The euro zone, however, is expected to underperform compared to the bloc as a whole – the EC expects gross domestic product in the euro zone to shrink by 0.4 per cent this year, growing by only 0.1 per cent in 2013 and 1.4 per cent in 2014.
“Europe is going through a difficult process of macroeconomic rebalancing, which will still last for some time. Our projections point to a gradual improvement in Europe’s growth outlook from early next year,” the economic and monetary affairs commissioner, Olli Rehn, said in a statement.
“Major policy decisions have laid the foundations for strengthening confidence. Market stress has been reduced, but there is no room for complacency. Europe must continue to combine sound fiscal policies with structural reforms to create the conditions for sustainable growth to bring unemployment down from the current unacceptably high levels,” he said.
Net exports are projected to continue contributing to growth, while domestic demand is expected to remain weak in 2013 and to pick up only in 2014, as it continues to be held back by the on-going deleveraging in some member states and the reallocation of resources across sectors, the EC said.
Bulgaria is seen doing better than the average – expanding by 0.8 per cent this year, followed by 1.4 per cent next year and two per cent in 2014.
The Commission’s estimates for this year showed 16 of the bloc’s 27 economies growing – but only modestly in Germany (0.8 per cent) and France (0.2 per cent). Among the larger economies expected to shrink were Italy (-2.3 per cent), Spain (-1.4 per cent) and the UK (-0.3 per cent).
The 2014 forecast, which assumes unchanged policies, envisions all EU member states, save Cyprus (-0.7 per cent), sporting economic growth.
The economy of Greece, the problem child of the euro zone, is seen as shrinking by six per cent this year and 4.2 per cent in 2013, but finally emerging from recession in 2014, when it is expected to grow by 0.6 per cent.
(Photo: Michael Faes/sxc.hu)