European Commission provides GDP estimates for euro zone nations
The European Commission has predicted that the 16-member euro zone will see growth of 0.9% this year – slightly better than the 0.7% forecast earlier this year.
However, Greece‘s economy, which has been in recession since the second quarter of 2009, is expected to contract by 3% this year, as the country in in the midst of a debt crisis.
The Commission admitted that the recovery in Europe remains uncertain as Greece’s debt crisis causes unease among investors and continues to de-value the euro, which has fallen to a one-year low against the US dollar.
Meanwhile, Spain’s economy is expected to contract by 0.4% this year, – again marginally better than the 0.6% previously forecast.
On a positive note, however, Portugal’s economy is forecast to expand by 0.5% after shrinking by 2.7% in 2009.
There have been fears that Greece’s debt crisis could spread to countries such as Portugal and Spain, so the raised growth forecasts will be welcome news for both economies.
In an interview with French newspaper, La Parisien, the head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, admitted that the possible spread of the crisis was a concern.
He said: “We have to succeed in avoiding contagion… we should remain vigilant.”