European Commission warns Eurozone economy to shrink further

Saturday, February 23, 2013

A map of the Eurozone as of 2013.
Image: Glentamara.

The European Commission has warned that the Eurozone economy will remain in recession for longer than expected and will not return to growth until 2014, reversing its previous forecast. In its winter forecast, the European Commission stated the economy of the Eurozone, which consists of 17 countries, is projected to shrink by 0.3% this year. This comes after a 0.6% contraction last year and marks a reversal from the committee's previous prediction of 0.1% growth in 2013.

Unemployment in the Eurozone is set to reach 12.2% in 2013, an increase from the 2012 level of 11.4%. Olli Rehn, the European Commissioner for Economic and Monetary Affairs, said that "decisive policy action undertaken recently is paving the way for a return to recovery". He went on to say: "We must stay the course of reform and avoid any loss of momentum, which could undermine the turnaround in confidence that is underway, delaying the needed upswing in growth and job creation."

The International Monetary Fund stated in January they expected the group of countries to experience a "mild recession" throughout 2013. The extended recession will see millions of people lose their jobs, the European Commision said, with the level of people unemployed across the region expected to continue to rise. The rise in unemployment could reach over 20 million across the Eurozone as the recession persists.