The European Commission lowered its official growth forecasts for the European Union (EU) and the euro zone on Wednesday, predicting lower growth next year and some of the lowest growth rates since the 1990s recession.
"The world is experiencing a synchronized slowdown as all majorregions were hit by shocks this year. The EU economy as well as that of the euro area cannot escape this fact," the EU's economic commissioner Pedro Solbes told a press conference at EU headquarters in Brussels.
"Despite the structural reforms undertaken so far, the euro area is experiencing a substantial economic slowdown," Solbes said. He said the euro zone's average growth rate of the gross domestic product (GDP) in 2001 is expected to be 1.6 percent, down from 3.4 last year. A pick-up is expected next year, but "it will initially be moderate."
In its autumn economic forecast report, the commission, the EU's executive branch, said the average growth rate of the 15-nation EU would be 1.7 percent this year, more than one percentage point lower than the 2.8 percent forecast the commission previously made in April for both the EU and euro zone, with a contraction expected in the fourth quarter.
Even if growth picks up in the first half of 2002, the euro-zone and the EU will only manage to expand by 1.3 percent and 1.4 percent respectively next year, the report shows.
The global slowdown is seen deeper and longer than initially anticipated because of the impact of the September 11 attacks on the United States, it said.
"But there is light ahead in the tunnel," Solbes said. "Following the rebound in activity forecast for 2002, the output gap will be closed in 2003 and an average GDP of 2.9 percent is expected for that year."
Comparing with the rest of the world, the EU commissioner said that as the 12-nation euro area "is free of major imbalances with a high savings rate, a current account surplus, and contained over-investment, the slowdown is expected not to be as severe as in the U.S. and there will be no recession."
"But on the other hand," Solbes said, "the euro area will not reach its full growth potential" until the United States recovers in the second half of next year.
(Xinhua News Agency November 22, 2001)
