EC: Economic growth is stalling; recession risks rising
Overview:
The European Commission (EC) has released its latest Economic Forecast. This sees an extremely large downward revision to forecast growth in the Euro area and EU-27 for 2012. Growth will essentially be close to zero on a q-o-q basis in the next few quarters. Indeed, there are significant downside risks even to this forecast: the economy may not just stall but actually enter recession if policy-makers fail to stem the sovereign debt crisis swiftly. This report suggests a difficult period ahead both within the Euro area/EU-27 and for those countries in Eastern Europe that rely on these blocks as destinations for exports and as sources of investment. Within the Euro area/EU-27 inflation will fall but unemployment will remain high. In Eastern Europe, policy-makers must prepare for yet another large, adverse external shock.