The European Commission has slashed its economic forecast for the eurozone, saying the area will only grow by 0.8 per cent this year, instead of the 1.2 per cent previously estimated. It has also has cut its growth forecast for 2015 to 1.1 per cent from 1.7 per cent.
EU vice president Jyrki Katainen, said "the economic and employment situation is not improving fast enough". "The EU’s recovery appears weak, in comparison to other advanced economies and with respect to historical examples of post-financial crisis recoveries, even though these too were typically slow and fragile," the commission said.
The revisions were particularly big in Germany and France, the two largest eurozone economies, for which the commission cut its projections by nearly a full percentage point for 2015. The gross domestic product forecast for Germany was cut from two per cent in May to 1.1 per cent, while France went from 1.5 per cent to 0.7 per cent.
"There is no single, simple answer to the challenges facing the European economy," Pierre Moscovici, the commission’s new economic chief, said in a statement.
"We must all assume our responsibilities, in Brussels, in national capitals and in our regions, to generate higher growth and deliver a real boost to employment for our citizens."
This new forecast comes a day after statistics from Eurostat showed the flash inflation figure to be up to 0.4 per cent for October from the 0.3 per cent recorded in September.
Officials noted that due to the drop in inflation alongside stuttering growth, the bank is still under pressure to ensure that it maintains its stimulus measures. It has already reduced its benchmark interest rate to 0.05 per cent and has begun an asset purchase programme.
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