Friday, May 11, 2012

EU predicts 0.3 pct eurozone contraction in 2012

The European Union estimates that the economy of the 17 countries that use the euro is in recession in the wake of a debt crisis that has prompted savage spending cuts and a jump in unemployment to record highs.
The European Commission, the executive arm of the EU, forecasts that the eurozone economy will contract by 0.3 percent in 2012 and grow by 1 percent next year. Its prediction for 2012 is far weaker than the one it gave last November, when it predicted growth of 0.5 percent. A year ago it was predicting growth of 1.8 percent.
Friday's forecasts provide clear evidence of the impact of Europe's debt crisis on the eurozone economy over the past year as governments have struggled to introduce deficit-reduction measures and business and consumer confidence has taken a dive.
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