Mild Recession Is Predicted For Euro Region, With Modest Growth Resuming Later This Year

Thursday, February 23, 2012 19:49
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Mild Recession Is Predicted For Euro Region, With Modest Growth Resuming Later This Year

Tags: European zone | world economy

The European Commission forecasts a stagnating European Union economy in 2012, but the second half of the year looks better than the first.

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The commission's interim economic forecast predicts a mild recession in the euro region during the first half of the year, followed by resumption of growth in the second half.


Gross domestic product should remain stagnant while the inflation rate increases slightly, the commission said, based on high energy prices and indirect-tax increases.


However, the commission predicts “a gradual return of confidence and a recovery of investment and consumption…in the second half of 2012.”


For investors looking at specific countries, GDP growth is forecast to be positive in 17 countries (Bulgaria, Denmark, Germany, Estonia, Ireland, France, Latvia, Lithuania, Luxembourg, Malta, Austria, Poland, Romania, Slovakia, Finland, Sweden and the United Kingdom) stagnant in one (Czech Republic) and negative in nine (Belgium, Greece, Spain, Italy, Cyprus, Hungary, the Netherlands, Portugal and Slovenia).


Growth will be highest in Poland (2.5%), Lithuania (2.3%) and Latvia (2.1%), and lowest in Greece (-4.4%) and Portugal (-3.3%), the commission predicts.

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