Friday, May 11, 2012

EU Economy to Shrink Further in 2012

and the Recession continues...

According to the European Commission’s latest analysis, the current debt crisis in Eurozone will continue as the economy of 17 Eurozone nations will shrink by 0.3 percent this year. He commission is optimistic about 2013 and expects a growth 1.0 percent.

Olli Rehn, the European Commissioner for Economic and Monetary Affairs, said “recovery is in sight ….. The economic situation remains fragile, with still large disparities across member states”. The commission agrees that currently, the Eurozone is in “recession”. A region is believed to be in recession if its economy shrinks for two consecutive quarters. The official figures for EU’s economy will be released on 15th May while analysts have  predicted a contraction of 0.2 percent for Q1 2012.

Current Predictions

The overall economic conditions for Europe, including the 17 Eurozone and 10 non-Euro nations, will remain stable with zero growth for 2012. Europe had witnessed a decrease in economic activity in the last quarter of 2011 while the situation is believed to have continued in the first quarter of the current year. The commission however, expects things to start improving from the second quarter of 2012 which will eventually lead to a growth in economy by the end of 2013.

Spain is the only European nation which witnessed a negative forecast for 2013 as its economy is expected to decline by 0.3 percent. It will have the highest jobless rate in Europe, 24.4 percent in 2012 and might touch 25.1 percent in 2013 as economy shrinks further. Greece will be behind Spain with unemployment rate of 19.7 percent in 2012 and 19.6 percent in 2013. Its economy will shrink by 4.7 percent this year but might stabilize by 2013.

The jobless rate is expected to be 11 percent for the Eurozone and 10.3 percent for EU in 2012-13.

Previous Prediction

The European Commission had previously predicted that
  • The Eurozone economy will grow by 0.5 percent in 2012 (November, 2011)
  • The Eurozone economy will grow by 1.8 percent in 2012 (2010)
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