Euro-Area Economy Headed for 2-Year Slump

EC lowers forecast; now predicts 0.4% decline in GDP in 2013.

The euro-area economy will shrink more than previously expected in 2013 as part of a two-year slump that has pushed up unemployment to a record, the European Commission said in new forecasts today.

Gross domestic product in the 17-nation region will fall 0.4 percent this year, compared with a February prediction of a 0.3 percent, the Brussels-based commission said today. This follows a 0.6 percent contraction in 2012 and shows the region headed for its first ever back-to-back years of falling output.

High Unemployment

“High unemployment points to the need for continuing the course in structural reforms,” said Marco Buti, head of the commission’s economics department. “The reduction in fiscal deficits is making headway in a differentiated way.”

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