Euro Region to Shrink Again This Year

EU forecasts another decline in eurozone GDP and a further increase in unemployment in 2013.

The euro-area economy will shrink in back-to-back years for the first time, driving unemployment higher as governments, consumers and companies curb spending, the European Commission said.

Gross domestic product in the 17-nation region will fall 0.3 percent this year, compared with a November prediction of 0.1 percent growth, the Brussels-based commission forecast today. Unemployment will climb to 12.2 percent, up from the previous estimate of 11.8 percent and 11.4 percent last year.

Budget Deadlines

The Stoxx 600 Index rose 1.1 percent as of 12:33 p.m. London time, bringing its advance for the year to 3 percent after a 14 percent gain last year. The euro slipped 0.1 percent versus the dollar to $1.3172. It has strengthened 6 percent over the past six months.

Budget Shortfalls

Rehn urged nations to keep cutting budgets and overhauling their economies in the face of slowing growth. In a statement, he said any shift away from fiscal consolidation would prolong the downturn.

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