EU expects gradual return to economic growth next year
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E-mail Xinhua, November 8, 2012
The short-term outlook for the European economy remains fragile, but a gradual return to growth is projected for 2013, according to a forecast by the EU's executive arm European Commission (EC) Wednesday.
On an annual basis, gross domestic product (GDP) is set to contract by 0.3 percent in the EU and 0.4 percent in the euro area in 2012, the EC said in its autumn economic growth forecast.
GDP growth for 2013 is projected at 0.4 percent in the EU and 0.1 percent in the euro area, the report added.
"Europe is going through a difficult process of macroeconomic rebalancing, which will still last for some time," Olli Rehn, the EU's economic and monetary affairs commissioner, said in a press conference after the report was published.
The structural reforms were expected to bear fruit from 2013, while an enhanced European Monetary Union (EMU) architecture would continue to strengthen confidence.
"This should pave the way for a stronger and more evenly distributed expansion in 2014," said the EC.
While projecting a "gradual improvement" in Europe's growth outlook from early next year, Rehn said there was no room for complacency.
"Market stress has been reduced, but there is no room for complacency. Europe must continue to combine sound fiscal policies with structural reforms to create the conditions for sustainable growth to bring unemployment down from the current unacceptably high levels," he said.
After the contraction of 0.2 percent in both the EU and eurozone in the second quarter of 2012, economic activity is not expected to recover before year end.
Net exports are projected to continue contributing to growth, but domestic demand is expected to remain weak in 2013 and to pick up only in 2014, as it continues to be held back by the ongoing deleveraging in some member states, said the report.
This process is set to leave its mark on the labor market. The EC expected the jobless rate to peak just below 11 percent in the EU and 12 percent in the euro area in 2013, though with large variations among member states.
The EC also foresaw declining inflationary pressure next year in spite of increasing energy prices and "indirect tax."
"Underlying domestic price pressures are subdued and inflation is forecast to fall below 2 percent in the course of 2013," said the report. Endi
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