Eurozone has entered a technical recession, but the recovery is in sight, the European Commission said in its Spring forecast, published Friday.
A gradual recovery is forecast to begin in the second half of the year and gather momentum in 2013. However, downside risks to the GDP forecast continue to prevail.
The economy is forecast to shrink 0.3 percent this year, in line with the February interim forecast. But it reflects a downward revision from the Autumn forecast of 0.5 percent growth. In 2013, the 17-nation bloc is expected to expand 1 percent.
"A recovery is in sight, but the economic situation remains fragile, with still large disparities across Member States," Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro said.
On the back of already decided consolidation combined with a gradual economic recovery later over the forecast horizon, budget deficits are expected to continue declining to 3.2 percent of GDP in 2012 from 4.1 percent in 2011, the Commission said. The unemployment rate is seen at 11 percent in 2013.
While risks to the growth outlook remain skewed to the downside, risks to the inflation outlook are broadly balanced. Eurozone inflation is expected to slow to 2.4 percent this year from 2.7 percent in 2011. For 2013, inflation is seen at 1.8 percent.
Source: RTT News