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Eurozone economies to shrink in 2013, EU says
February 23, 2013, 8:56 am

A woman begs for money amid passers by in downtown Milan, Italy [AP]

A woman begs for money amid passers by in downtown Milan, Italy [AP]

Hopes for a speedy recovery in Europe were dealt a blow yesterday when the European Commission released figures that showed the economy of the 17-member eurozone will shrink 0.3 per cent in 2013 and not 0.1 per cent as previously predicted.

According to the European Union statistics office Eurostat, the economy for the 17-member eurozone shrank by 0.6 per cent in 2012’s fourth quarter, up from earlier forecasts of 0.4 per cent.

Europe’s powerhouses Germany and France also registered contraction by 0.6 and 0.3, respectively, delivering a blow to hopes that the eurozone would successfully emerge from recession in 2013’s first quarter.

Earlier this week, the European Central Bank released data which showed that consumer confidence had taken a hit.

Earlier in January, the European Commission’s office for Employment, Social Affairs and Inclusion released a report that indicated unemployment in some countries has reached record levels with nearly 19 million people jobless in the eurozone.

The EU report on February 22 forecast slightly higher unemployment rates: 26.9 per cent in Spain (up from 26.6 per cent), while in Greece jobless rates have increased from 19 to 27 per cent over the past year (up from 26 per cent previously forecast).

Portugal’s unemployment rate is 17.3 per cent.

“This has grave social consequences and will, if unemployment becomes structurally entrenched, also weigh on growth perspectives going forward,” said Marco Buti, the European Commission’s top civil servant, in a statement shortly after the report was released.

According to the Employment and Social Developments in Europe Review, “household incomes have declined and the risk of poverty or exclusion is on the rise, especially in member states in southern and eastern Europe”.

Source: Agencies