Brussels, 15/09/2011 (Agence Europe) - The European Commission has, for now, ruled out the spectre of a recession in the EU but, on Thursday 15 September, it did significantly revise its growth forecasts downwards for the second half of 2011 due to the impact of the debt crisis.
Olli Rehn, Commissioner for Economic and Financial Affairs, declared: “These economic forecasts are much more gloomy than those made last spring and growth is tending to fall. Inflation is expected to stabilise and become more moderate than what we expected in May”. He stated that they expected the economic growth to stall but that a recession would be avoided and that, “recovery from financial crises is often slow and bumpy”.
After an encouraging start at the beginning of the year, the sky gradually clouded over in the eurozone compelling the Commission to revise its growth forecasts downwards for the third (+0.2%, as opposed to +0.4% expected by the Commission in its May forecasts) and fourth quarters (+0.1%, as opposed to +0.4%). For the EU as a whole, the Commission is expecting very weak growth of 0.2% for the third and fourth quarters (as opposed to +0.4 and +0.5% respectively according to last May's forecasts). It is expected that there will be zero growth in Italy in the third and fourth quarters and +0.1% in the third and fourth quarters for Spain and the Netherlands. In Germany there is a +0.4% forecast for the third quarter and +0.2% for the fourth quarter. France is forecast +0.2% for the third and fourth quarters.
Commission lowers its forecasts for heavyweights except Germany. Nonetheless, the Commission maintained its forecast of a 1.6% growth in GDP for the whole of the euro zone in 2011, thanks to healthier growth than expected in the first quarter of the year. Growth of 1.7% in GDP is expected in the whole of the EU in 2011. This is a slight fall compared to the figure of +1.8% expected in May, due to a significant downward revision for the United Kingdom (1.1%, as opposed to 1.7%). According to Commission forecasts, 2011 growth is expected to be limited to 1.6% in France (as opposed to 1.8% expected last May by the Commission), 0.7% in Italy (as opposed to 1%) and 1.7% in Italy (as opposed to 1%) and 1.7% in the Netherlands (as opposed to 1.9%). The Commission confirmed its forecasts for Spain (+0.8%). For Germany, the Commission is counting on growth in 2011 of 2.9% (last May, it forecast 2.6%) and 4% growth for Poland.
Inflation eases. The European Commission slightly revised its forecast for inflation downwards. In the eurozone it is expected to reach 2.5%, as opposed to 2.6% forecast last May and 2.9% (as opposed to 3%) for the whole of the EU. Inflation is expected to remain above 2% until the end of the year.
Global context. During the summer, the Commission explained that there were signs of greater deterioration in demand in world trade. In the US, recovery has run out of steam and indicators on world trade reveal another fall in the third quarter. The Commission today forecasts that world production would increase around 4% in 2011, a figure that has been revised downwards by half a percentage point compared to the spring forecasts.
The situation on the financial markets has worsened due to the contagion in uncertainties regarding sovereign debt in the eurozone and anxiety about prospects for growth and cutting the budget deficit in the US. (LC/transl.fl)