The Commission forecast a slow economy recovery from the second half of 2012 onwards
The Spring forecast 2012-13 published by the European Commission shows that the EU economy is estimated to be currently in a mild recession, following the output contraction in late 2011. However, it is expected an acceleration in global growth, and thus it is foreseen a slowly recovery in the second half of the year on.
According to the European Commission, the picture presented in the interim forecast in February is broadly confirmed for 2012, with real GDP projected to stagnate in the EU and to contract by -0.3% in the euro area. For 2013, growth is forecast at 1.3% in the EU and 1.0% in the euro area. The Commission Vice-President for Economic and Monetary Affairs and the Euro, Olli Rehn highlighted that the economic situation remains fragile, with still large disparities across Member States, although a recovery is in sight. Mr Rehn also underlined that the EU must support the adjustment by accelerating stability and growth-enhancing policies.
The forecast also shows that unemployment is expected to remain high at 10% in the EU and 11% in the euro area over the forecast period. Inflation is set to moderate gradually as the impact of higher oil prices and tax increases fades away. In addition, fiscal consolidation is forecast to progress, with public deficits in 2013 declining to 3.3% in the EU and just below 3% in the euro area. On the other hand, notwithstanding the output slowdown in the course of 2011, public finances in the EU improved significantly in 2011.
The economic situation differs considerably across Member States, also in view of the ongoing adjustment to the large disparities in external positions and structural conditions that have come to the fore over the last years. The Commission also remains that the necessary efforts of banks to further improve their balance sheets will keep credit conditions tight, though credit demand overall also remains weak so far. Private consumption will be dampened by high unemployment, slow wage growth and inflation as well as high household debt in a number of Member States.