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Eurozone recession will continue in 2013: EU

Eurozone recession will continue in 2013: EU
Highlights

The 17-nation bloc to shrink by 0.4% this year Greece likely to reverse 6-year recession Record unemployment in the single currency area will...

  • The 17-nation bloc to shrink by 0.4% this year
  • Greece likely to reverse 6-year recession

Record unemployment in the single currency area will endure, the European Commission's spring forecasts showed, with strong divergence between richer eurozone states to the north and members to the south mired in deep recession

eurozon

Brussels (AFP): Recession in the crisis-hit eurozone will continue unabated for the rest of the year with unemployment remaining at record levels, the European Union warned on Friday, though signs of recovery could emerge in 2014.

Economic output in the 17-nation area � home to 340 million people and a global rival to the United States, Japan and emerging giants � will shrink by 0.4 per cent this year, the European Commission (EC) said, worse than the 0.3 per cent forecast in February and after a 0.6 contraction last year.

Record unemployment in the single currency area will endure, the European Commission's spring forecasts showed, with strong divergence between richer eurozone states to the north and members to the south mired in deep recession.

Repeating its last estimate, the Commission said eurozone joblessness this year would hit a record 12 per cent and 11 per cent across the whole 27-member EU. The rates vary hugely, with an alarming 27 per cent in Spain and a low 4.7 per cent in Austria. "In view of the protracted recession, we must do whatever it takes to overcome the unemployment crisis in Europe," EU Economic Affairs Commissioner Ollie Rehn said in statement accompanying the Commision's latest economic forecast for the euozone and full European Union.

"In Spain and Greece unemployment rates are at unbearably high levels," Rehn said at a news conference. The crisis will be hugely felt in recently bailed out Cyprus where output is expected to contract by 8.7 per cent this year in the wake of a severe restructuring of the island nation's key banking sector, including a controversial "haircut" on deposits.

The Cypriot recession will prolong into 2014 and beyond, the Commision said, with the economy expected to contract by an overall 15 per cent between 2012 and 2015.

In a rare glimpse of encouragement, the Commission saw recovery in Greece by the end of the year after six consecutive years of recession. The country is forecast to eke out 0.6 per cent growth in 2014, after contracting sharply by 4.2 per cent this year.

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