Europe acknowledges sharp economic downturn
Written on September 11, 2008
The European Commission slashed its economic growth forecasts for Europe on Wednesday in an admission that a downturn which began in the United States is hitting far harder than many imagined six months ago.
France, which holds the rotating presidency of the European Union, meanwhile rejigged the agenda for a Friday meeting of EU finance ministers to focus on the downturn, also admitting that things were looking much worse than initially expected.
The Commission, predicting what amounts technically to brief recessions in Germany, Spain and Britain, and not much better in other big economies, raised its forecasts for inflation at the same time as it lowered them for growth in the 15-country euro zone and 27-strong EU of which the euro zone is part.
It forecast gross domestic product growth of 1.3 percent for this year in the euro zone, and no longer the 1.7 percent it was reckoning on in April, when the Commission and many policymakers saw no risk of recession in Europe http://us-fast-cash-now.com.
It forecast growth of 1.4 percent for the broader EU, which includes Britain, Sweden, Denmark and several countries in the formerly communist eastern Europe, and no longer the 2.0 percent it had been counting on in April.
Between April and now, policymakers have had to digest news that GDP shrank in the euro zone in the April-June period, the first quarter of GDP contraction recorded since the currency bloc was created in 1999.
BITING THE BULLET
Policymakers remained reluctant to use the word “recession” nonetheless on Wednesday, when European Central Bank President Jean-Claude Trichet stuck to describing the current downturn as a trough and European Commissioner Joaquin Almunia declined to endorse the R-word at a news conference on the new forecasts.
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