European Union Trims Euro Area’s Growth Forecasts With the 17-nations economy struggling to gain momentum as the debt crisis continues for the fifth year and as unemployment climbed to a record, the European Union trimmed its forecast for euro area’s growth next year. Brussels based commission today stated that the gross domestic product in the 17-nation currency bloc is expected to climb 1.1 percent in 2014, 0.1 percent lower than the initial 1.2 percent forecast in May. Unemployment is expected at 12.2 percent in 2014, a bit higher than the early predictions of 12.1 percent six months ago. According to the EU Economic and Monetary Affairs Commissioner, Olli Rehn, the structural reforms and the fiscal consolidation undertaken in Europe were the main reasons for the current recovery. Mr Rehn further stated that it’s too early though to say that everything is in place, since unemployment is still at high levels and a lot of work is needed to modernize the European economy. He also highlighted that the current gloomier outlook makes it more difficult for European governments in convincing the financial markets that they are tackling turmoil via structural reforms and deficit reduction. Furthermore, economies, such as Belgium, Germany, Estonia and Ireland are expected to gain momentum next year, while Italy, Portugal, Greece and Spain will face much weaker growth rates. The main exceptions, whose growth figures now lag behind their northern neighbors, are those of Netherlands and Finland. In addition, further pressure is expected to be exerted on the European Central Bank in cutting interest rates, after the predictions that the euro area annual inflation will climb 1.5 percent in 2014 and slow down 1.4 percent in 2015. The services and manufacturing output unexpectedly slowed in October, while unemployment reached 12.2 percent. Moreover, Spain, the fourth largest economy in the euro area, had its 2014 growth downgraded from a forecast of 0.9 percent in May to 0.5 percent. Prime Minister Mariano Rajoy imposed the deepest budget cuts in the country’s democratic history.
Posted on: Tue, 05 Nov 2013 11:21:02 +0000
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