According to the latest interim forecast of the European Commission, presented on 23 February, EU economy is projected to stagnate in 2012, while the euro area is set to enter into a mild recession. Modest growth is predicted to return in the second half of the year.
Overall, in 2012 GDP is forecast to remain unchanged in the EU and to contract by 0.3% in the euro area. While 17 EU countries are expected to see growth, others are being held back by ongoing market uncertainty, concerns about the public debt crisis, and lower demand for exports. GDP growth is therefore expected to be stagnant in one country and negative in nine.
Inflation remains higher than expected. For 2012 as a whole, the inflation rate is now projected at 2.3% for the EU and 2.1% for the euro area.
The economic outlook is conditioned by a less-supportive global economy, with the ongoing weakening of global demand weighing on net European exports. Overall, a gradual return of confidence and a recovery of investment and consumption are expected in the second half of 2012.
More on the interim spring economic 2012 forecast.