EU predicts new eurozone recession

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The Commission cites one of the main reasons that the currency bloc will continue to see weaknesses this year is because it has yet to break its vicious cycle of debt.

A fragile economy and a pessimistic prediction - Germany's future development is critical, as the biggest economy of the Eurozone.

Even though the EU forecasts a slight 0.6% growth for 2012, lower than its previous prediction, markets and the media remain confident about Germany's economy. The business prospect index for February climbed from 108.3 to 109.6 from last month, a record over the past 7 months.

Robert Harwood, chief market analyst of Baader Bank, said, "We have a sound economic environment ever since. China's economy is growing. US economy will not enter into a second recession. Threshold countries' economy is growing. Germany will benefit from the growing world economy."

Italy, however, is not faring so well. The EU forecasts Italy's economy will enter serious recession in 2012, while its GDP growth will fall by 1.3%, worse than 0.1% growth predicted last year.

This leads many people to doubt the country's austerity plans, which have reduced bank loans, and cracked business capital chains. The raised tax rates are also cutting people's spending. However, all these are only short term pain before economic recovery.

An EU economic expert said, "The austerity plan proposed by Prime Minister Mario Monti will surely reduce people's income, but it will not bring great changes. I believe it is a precondition for future economic recovery."

In France, the EU has adjusted its economic growth from 0.6% to 0.4%. Le Monde says the recession projection will bring an argument between stricter fiscal policies and maintaining growth.

Les Echos says it shifts people's focus back on how to achieve economic growth. Meanwhile, Le Parisien says France's economy this year will face a clear recession.

 

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Editor:Zhang Dan |Source: CNTV.CN

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