Eurozone growth forecast drops
4 April 2005, BRUSSELS – The European Commission has predicted a 0.4 point fall in economic growth in the eurozone for 2005.
4 April 2005
BRUSSELS – The European Commission has predicted a 0.4 point fall in economic growth in the eurozone for 2005.
Growth this year will only be 1.6 percent, compared to two percent last October, show figures released on Monday.
Eurozone heavyweights Germany, France and Italy all look set to continue their excessive deficits of over three percent of GDP.
After two percent growth in 2004, the eurozone economy hit a slowdown but Brussels is expecting the situation to pick up again later this year, leading to 2.1 percent growth in 2006.
For the 25-nation EU bloc, the Commission has also predicted a 0.3 percent drop in its growth prediction for 2005, down to two percent.
The Commission has predicted a rise again to 2.3 percent next year.
This optimism is founded on "the progress of internal demand and especially
on a sharp rise in investment, "say EU regulators.
However, EU Economics chief Joaquin Almunia has warned that economic optimism may be threatened by unpredictable forces such as the price of crude oil and the value of the euro.
Brussels is expecting the price of crude oil to be an average of USD 50.9 (EUR 39.7) this year, "but if the price of crude oil rises then this will have an impact on economic growth," said Almunia.
"Another risk is chaotic movement in exchange rates," he said at a press conference, adding that the Commission expected an average rate of USD 1.32 to the euro this year.
Unemployment rates should remain stable at 8.8 percent of the active population of the eurozone and nine percent in the EU-25.
In 2006 it will fall respectively to 8.5 and 8.7 percent, with the Commission forecasting the creation of three million jobs in 2005 and 2006.
The eurozone countries are Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland.
[Copyright Expatica 2005]
Subject: Belgian news