February 22, 2013
The economic slowdown that has shaken the eurozone’s periphery will continue to bleed into the currency bloc’s core this year, with France and Germany barely growing, according to highly anticipated forecasts published on Friday by the European Commission.
The worsening economic picture – where France’s gross domestic product is expected to grow by just 0.1 per cent and Germany’s by 0.5 per cent in 2013, both 30 basis point downgrades from three months ago – will see the eurozone as a whole shrink 0.3 per cent this year. The Commission had predicted growth of 0.1 per cent in November.
“The weakness of economic activity towards the end of 2012 implies a low starting point for the current year,” the EU’s economic affairs commissioner, Olli Rehn, said in a statement. “The current situation can be summarised like this: we have disappointing hard data from the end of last year, some more encouraging soft data in the recent past and growing investor confidence in the future.”
The deepening recession will hit particularly hard in countries that have required EU financial assistance, particularly Greece, Spain and Portugal, which are expected to suffer deeper recessions this year and barely return to growth next year, according to the new forecasts.