Weak domestic demand continues to hamper economic recovery in the European Union, said Olli Rehn, commissioner in charge of Economic and Monetary Affairs at a press conference in Brussels on May 5.
The economic growth for 2010 is projected to be a mere 1 percent, with 1.75 percent next year. The EU faces several fronts that will restrain domestic demand for several years, according to the spring forecast.
The construction sector is diminishing in several countries. There are signs of improvement in the labor market but unemployment is expected to remain high. On the other hand, export is gaining due to the stronger demands from the emerging economies.
A potential threat to economic recovery is the unstable financial situation in several countries within the EU. Currently, Greece hits the headlines with social turmoil caused by its financial collapse. Other countries like Portugal and Spain need to urgently consolidate their public finances.
Olli Rehn said the EU must ensure that economic growth is not disrupted by financial instability.