Brussels Trims Euro Zone Growth Forecast
The European Commission has slightly lowered its forecast for economic growth in the eurozone in 2007, citing the impact of the recent turmoil in the global financial market and weaker performance in the second quarter by some member states.
In its bi-annual interim economic forecast, presented on Tuesday (11 September), the EU executive estimated an economic growth of 2.5% in the 13 member states using the euro currency and 2.8% for the whole of the 27-member bloc.
Both numbers are a 0.1 percentage point below the forecast set in the Spring forecast last May.
"This is explained by both a weaker-than-expected second quarter and by the impact of the recent turmoil in financial markets that has lead to increased uncertainty and tighter financing conditions," said EU economic and monetary affairs commissioner Joaquín Almunia at a press conference on Tuesday.
The prediction is based on the outlook for growth of the gross domestic product (GDP) and inflation in France, Germany, Italy, the Netherlands, Poland, Spain and the UK - which together account for more than 80% of the EU's GDP.
"The fundamentals of the euro area and the European economies remain solid," Mr Almunia said, adding that this would help weather the current financial turmoil.
"But the increased risks to the outlook require governments to hold steady to the reform and budgetary consolidation agenda, precisely to enhance the resilience of the EU economy," Mr Almunia warned.
He said bad second quarter figures were the result of unexpected downturns in the Dutch, French and Italian economies.