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EU's 2012 growth view cut by over 50%
Source: Bloomberg News |
November 11, 2011, Friday
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Print Edition
Print Edition
THE European Commission cut its eurozone growth forecast for next year by more than half and said it sees the risk of a recession as leaders struggle to contain the fiscal crisis.
The gross domestic product may grow 1.5 percent this year and 0.5 percent in 2012, the Brussels-based commission said yesterday. It had earlier projected the 17-nation region to expand 1.6 percent this year and 1.8 percent next year. In 2013, the economy may expand 1.3 percent, the commission said in a report.
The euro-area economy is edging toward recession as governments are seeking ways to end the turmoil that has rattled global equity markets. The commission said the risk of an economic contraction is "not negligible" and identified the fiscal crisis among the main threats.
"The outlook is unfortunately gloomy," Olli Rehn, the European Union economic and monetary affairs commissioner, said in Brussels yesterday. "The forecast is in fact the last wake-up call. The recovery has now come to a standstill and there's the risk of a new recession unless determined action is taken."
The euro region's gross debt may average 90.4 percent of GDP next year, up from 88 percent in 2011, the report showed. In 2013, government debt may average 90.9 percent. The region's budget deficit may reach 4.1 percent of GDP this year before averaging 3.4 percent in 2012, according to the commission. That's above the region's 3 percent limit for budget shortfalls.
In Greece, government debt may reach 198.3 percent of GDP in 2012, up from an estimated 162.8 percent this year. Italy's debt is seen at 120.5 percent of GDP this year and next.
Rehn told five EU nations to speed up their deficit-cutting efforts or face sanctions.
Belgium, Cyprus, Hungary, Malta and Poland need to provide "convincing evidence of permanent fiscal measures and preferably full 2012 budgets" by mid-December, Rehn said. "I am sending letters to specify our requests to the finance ministers of these five countries today."
The gross domestic product may grow 1.5 percent this year and 0.5 percent in 2012, the Brussels-based commission said yesterday. It had earlier projected the 17-nation region to expand 1.6 percent this year and 1.8 percent next year. In 2013, the economy may expand 1.3 percent, the commission said in a report.
The euro-area economy is edging toward recession as governments are seeking ways to end the turmoil that has rattled global equity markets. The commission said the risk of an economic contraction is "not negligible" and identified the fiscal crisis among the main threats.
"The outlook is unfortunately gloomy," Olli Rehn, the European Union economic and monetary affairs commissioner, said in Brussels yesterday. "The forecast is in fact the last wake-up call. The recovery has now come to a standstill and there's the risk of a new recession unless determined action is taken."
The euro region's gross debt may average 90.4 percent of GDP next year, up from 88 percent in 2011, the report showed. In 2013, government debt may average 90.9 percent. The region's budget deficit may reach 4.1 percent of GDP this year before averaging 3.4 percent in 2012, according to the commission. That's above the region's 3 percent limit for budget shortfalls.
In Greece, government debt may reach 198.3 percent of GDP in 2012, up from an estimated 162.8 percent this year. Italy's debt is seen at 120.5 percent of GDP this year and next.
Rehn told five EU nations to speed up their deficit-cutting efforts or face sanctions.
Belgium, Cyprus, Hungary, Malta and Poland need to provide "convincing evidence of permanent fiscal measures and preferably full 2012 budgets" by mid-December, Rehn said. "I am sending letters to specify our requests to the finance ministers of these five countries today."
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