Eurozone Likely To See Mild Recession In 2012: EC

Eurozone Likely To See Mild Recession In 2012: EC




The European Commission on Thursday said the euro area is likely to see a mild recession in 2012.
In its interim forecast, the commission said the Eurozone is expected to contract 0.3 percent this year, compared to the 0.5 percent expansion estimated in the autumn forecast.
The downside risks remain substantial despite some favorable developments in recent weeks, the commission assessed. If an aggravation of the sovereign-debt crisis were to result ultimately in a credit crunch and ensuing lower domestic demand, this would probably entail a deeper and prolonged recession.
On the back of persistently high energy prices, inflation has remained higher than forecast in autumn and is expected to decelerate slowly over the forecast horizon, it said. For 2012 as a whole, the HICP inflation rate is projected at 2.1 percent. In 2011, it is estimated to have amounted to 2.7 percent.

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