EU sees deeper recession in gloomy outlook
Recession in the crisis-hit euro zone will be deeper than expected for the rest of the year, hitting even Europe’s biggest economies and leaving unemployment at record levels, the EU warned Friday.business Updated: May 03, 2013 23:43 IST
Recession in the crisis-hit euro zone will be deeper than expected for the rest of the year, hitting even Europe’s biggest economies and leaving unemployment at record levels, the EU warned Friday.
Though signs of recovery could emerge in 2014, four of the euro zone’s biggest economies — France, Italy, Spain and the Netherlands — will see negative growth, the European Commission said in its spring forecast.
Economic output in the 17-nation area — home to 340 million people and a global rival to the United States, Japan and emerging giants — will shrink by 0.4% this year, worse than the 0.3% forecast in February and after a 0.6 contraction last year.
The failure of Europe’s economies to emerge from the debt crisis means record unemployment that last month saw 19 million people on the dole will endure, though differences are wide between richer euro zone states to the north and those to the south.
“In view of the protracted recession we must do whatever it takes to overcome the umeployment crisis in Europe,” said the EU’s commissioner for economic affairs Olli Rehn.
Euro zone joblessness this year would hit a record 12% and 11% across the whole 27-member EU. The rates vary hugely, with an alarming 27% in Spain and Greece, which Rehn said was “unbearably high”, but a low 4.7% in Austria and 5.4% in Germany.
France, the euro-currency area’s second economy, will shrink by 0.1% in 2013 as weakness in household demand, a key economic driver, finally takes its toll. France will then rebound to 1.1% growth in 2014, the data said. But France, along with Spain and the Netherlands, will miss commitments to meet the EU’s 3% of GDP deficit ceiling.
France will post a 3.9% deficit this year and a 4.2% shortfall next year.
First Published: May 03, 2013 23:42 IST