The European Commission announced on May 4 its spring economic forecast for the rest of 2009 and 2010. The projected slowdown in growth was revised to 4 percent instead of the previously expected 2 percent.
The most notable factors behind the pessimistic re-estimation of economic indicators were the deepening economic crisis, abrupt fall in world trade volumes and drop in real estates prices in several countries.
However, the European governing body believes that despite experiencing the worst recession since World War II, governmental fiscal and monetary stimulus measures can be even more effective than expected and may help bring back stability and hope in financial markets. In 2010, the economic growth rate is expected to reach 2%.
“The European economy is in the midst of its deepest and most widespread recession in the post-war era. But the ambitious measures taken by governments and central banks in these exceptional circumstances are expected to put a floor under the fall in economic activity this year and enable a recovery next year. For this to happen we need to proceed rapidly with the cleaning up of the ‘impaired assets’ on bank balance sheets and recapitalize banks when appropriate,” Joaquín Almunia, Commissioner for Economic and Monetary Affairs announced at a press conference in Brussels.
Still, prospects in the EU countries seem gloomy. Great Britain and Italy expect to see their economy shrink by 4 to 5 percent in 2009, while socially-oriented France is expected see an economic drop of 3 percent drop level due to governmental cushion. Spain’s economy is also expected to slow down by 3 percent. Germany’s economy is expected to shrink by 5.4 percent, mainly due to thinning demand of automobiles and machinery.
Latvia, Lithuania and Estonia are threatened by a double-digit decrease in economic growth due to housing prices collapse. Cyprus, surprisingly, is predicted to experience a positive economic growth.
The European labor market is especially hardest hit by the worsening economic conditions, although unemployment usually lags behind business slowdown. According to the forecast, unemployment among the 16 member states that use the Euro currency will reach a postwar record of 11.5 percent in 2010, accounting to 8.5 million job losses for the period 2009-2010.
The United Kingdom and France anticipate having more than 3 million unemployed next year. France has already reported 11 percent unemployment rate. The worst situation will be in Spain where the jobless will amount to 20 percent of the capable working force.
Almunia, as quoted by the AFP, said that the earliest time for discussing a new stimulus package for the European states is at the EU leaders summit in June.
The most notable factors behind the pessimistic re-estimation of economic indicators were the deepening economic crisis, abrupt fall in world trade volumes and drop in real estates prices in several countries.
However, the European governing body believes that despite experiencing the worst recession since World War II, governmental fiscal and monetary stimulus measures can be even more effective than expected and may help bring back stability and hope in financial markets. In 2010, the economic growth rate is expected to reach 2%.
“The European economy is in the midst of its deepest and most widespread recession in the post-war era. But the ambitious measures taken by governments and central banks in these exceptional circumstances are expected to put a floor under the fall in economic activity this year and enable a recovery next year. For this to happen we need to proceed rapidly with the cleaning up of the ‘impaired assets’ on bank balance sheets and recapitalize banks when appropriate,” Joaquín Almunia, Commissioner for Economic and Monetary Affairs announced at a press conference in Brussels.
Still, prospects in the EU countries seem gloomy. Great Britain and Italy expect to see their economy shrink by 4 to 5 percent in 2009, while socially-oriented France is expected see an economic drop of 3 percent drop level due to governmental cushion. Spain’s economy is also expected to slow down by 3 percent. Germany’s economy is expected to shrink by 5.4 percent, mainly due to thinning demand of automobiles and machinery.
Latvia, Lithuania and Estonia are threatened by a double-digit decrease in economic growth due to housing prices collapse. Cyprus, surprisingly, is predicted to experience a positive economic growth.
The European labor market is especially hardest hit by the worsening economic conditions, although unemployment usually lags behind business slowdown. According to the forecast, unemployment among the 16 member states that use the Euro currency will reach a postwar record of 11.5 percent in 2010, accounting to 8.5 million job losses for the period 2009-2010.
The United Kingdom and France anticipate having more than 3 million unemployed next year. France has already reported 11 percent unemployment rate. The worst situation will be in Spain where the jobless will amount to 20 percent of the capable working force.
Almunia, as quoted by the AFP, said that the earliest time for discussing a new stimulus package for the European states is at the EU leaders summit in June.
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