European Commission's Economic Forecast

The European Commission's autumn forecast projects that the EU economy will emerge from recession in the second half of this year, although for 2009 as a whole GDP is still set to fall by some 4 per cent. A gradual recovery is expected with GDP forecast to grow by 0.75 per cent in 2010 and around 1.5 per cent in 2011. The near-term rebound in activity follows from improvements in the external environment and financial conditions, as well as from the significant fiscal and monetary policy measures put in place.

Further out, a number of factors are set to restrain private demand and thus, the strength of the recovery. In particular, labour-market conditions will remain weak, with the unemployment rate projected to reach 10.25 per cent in the EU. The public deficit is also expected to rise, to 7.5 per cent of GDP in 2010, before falling back slightly in 2011 as the economy picks up and temporary measures gradually come to an end.

ENDS

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