Eurozone economy facing deep recession unless fiscal measures implemented
According to the European Commission, the eurozone is faced with a deep and prolonged recession and forecasted that the economy will contract by 1.9% this year and expand by just 0.4% next year.
Official figures show that the 16-member nation has been in recession since September 2008. However, recovery will be seen in the second half of this year provided that financial markets stabilise and stimulus packages are implemented quickly.
Joaquin Almunia, Economy Commissioner, said that recovery in the latter of the year will be achieved through easing of monetary policy and measures to stabilise the financial markets.
Mr Almunia added that unemployment in eurozone is expected to rise to 8.7% this year and 9.5% next year.
Eurozone finance ministers are to meet later today to discuss measures of combining short-term deficit expenditure to end the recession with a return to fiscal discipline over the medium to long term.
Last week, the European Central Bank (ECB) cut interest rates in the eurozone by 0.5% to 2%, as expected by analysts.
The reduction is the fourth time the ECB has cut rates in as many months as it endeavours to fight off a prolonged recession.
Meanwhile, inflation in the eurozone has fallen to a 26-month low last month, as a result of the sharp fall in the price of energy bills.