EU Forecasts Economy to Shrink by 4% in 2009

May 5, 2009 at 10:32 am

Today the European Commission lowered its forecast for growth in the European Union this year, projecting that EU GDP would fall by four percent before broadly stabilizing in 2010.

“The European economy is in the midst of its deepest and most widespread recession in the post-war era,” said Joaquín Almunia, EU Commissioner for Economic and Monetary Affairs. “But the ambitious measures taken by governments and central banks in these exceptional circumstances are expected to put a floor under the fall in economic activity this year and enable a recovery next year. For this to happen we need to proceed rapidly with the cleaning up of the ‘impaired assets’ on bank balance sheets and to re-capitalize banks when appropriate.”

The European Commission’s forecasts also showed that the unemployment rate is expected to increase to 11 percent in the EU in 2010. The public deficit is projected to rise sharply to 7.25 percent of GDP in 2010, reflecting both the slowdown and the discretionary measures taken to support the economy.

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Entry filed under: Business Environment, European Union, NKITA, North America, Recession.

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