EU Growth Looks Grim

Sept. 19, 2011 - PRLog -- The eurozone crisis is dragging down growth in the second half of the year but not to the point of recession, the EU said on Thursday as finance ministers headed to key talks on solutions. EU Economic Affairs Commissioner Olli Rehn said the economy was set to come to a virtual standstill in the second half of the year, but he assured that Europe would avoid another recession. The outlook for the European economy has deteriorated; Rehn told a news conference releasing a European Commission interim report on the economy. Compared to last spring, when the EU Executive issued its last forecasts, annual GDP growth projections for the eurozone have now been revised downwards by 0.5 per cent, which, in the circumstances, is considered substantial. According to the forecasts, annual growth in the euro area is expected to reach 1.6 per cent, below the 1.8 per cent registered in 2010. A stalling of economic growth is expected, but not a recession. The next forecasts, which will give a clearer picture of the latest developments for 2011, will be issued by the Commission in November and will include projections for all the 27 members of the EU. The G7 group of rich countries -- Germany, Canada, the United States, France, Italy, Japan and the United Kingdom -- failed last week to find any answer to the global economic slowdown, and has turned for input to the G20, which also includes emerging states.

Recoveries from financial crises are often slow and bumpy. Rehn said the EU economy is affected by a more difficult external environment, while domestic demand remains subdued. The sovereign debt crisis has worsened, and the financial market turmoil is set to dampen the real economy. The European Commission said that weakening global demand and trade over the summer, and signs that the recovery lost steam in the United States over the summer, also contributed to Europe’s economic slowdown. Top European officials are fighting speculation that Greece will go bankrupt, or worse, be forced to abandon the euro. German Chancellor Angela Merkel and French President Nicolas Sarkozy declared their full support for Athens after a teleconference with Papandreou. Greece also reiterated that it was determined to meet all the deficit reductions plans it agreed to in exchange for its two bailouts. Concerns continue that Greece will default on its debt. The comments are aimed at calming markets that have seen turbulent trading in recent weeks over fears surrounding Greece's finances. This has also increased speculation that Greece may have to leave the 17-nation single currency zone. Greece is set to receive the next loan from its initial bailout later this month, but it will get this only if inspectors from the European Union, European Central Bank and International Monetary Fund agree that it is keeping up with its spending cut targets. There are some fears that they may rule that Greece has fallen behind. Without this month's loan, Greece will not be able to meet its debt payments by the middle of next month.

# # #

About Provideo Financial:

Provideo Financial is a family oriented firm that operates on a set of sound financial strategies designed to maximize our client's investment opportunities.

http://www.provideofinancial.com