ECB cuts eurozone growth forecasts

ECB cuts eurozone growth forecasts
Published: 09 August 2013
FRANKFURT - Professional forecasters surveyed by the European Central Bank have again cut their eurozone growth forecasts for this year and next year, the ECB said yesterday.

According to the ECB's quarterly Survey of Professional Forecasters, the eurozone economy will contract 0,6 percent this year instead of 0,4 percent expected previously, the ECB wrote in its monthly bulletin for August. And next year, eurozone gross domestic product will expand by 0,9 percent, not 1 percent as the last SPF survey in April had projected.

In 2015, growth will reach 1,5 percent, not the 1,6 percent initially forecast, following earlier revisions for all three years.

"Respondents cite the weaker than expected euro area domestic demand during the first quarter of 2013 as the main factor behind the downward revisions for 2013," the ECB said.

"Moreover, disappointing data from key emerging economies such as China and Brazil imply a lowering in the expected contribution of net trade to growth in the near term. The slight downward revisions for 2014 and 2015 are also mainly attributed to lower domestic demand."

Turning to the inflation outlook for the 17 countries that share the euro, the ECB survey saw a slight downward revision to the forecast to an annual average 1,5 percent for both this year and next year from 1,4 percent and 1,3 percent respectively.

The forecasters attributed the change to "weaker economic activity and labour markets, lower commodity prices, and smaller contributions to inflation from indirect taxes and administered prices as a result of delayed fiscal consolidation measures".

Unemployment in the eurozone was expected at 12,3 percent in 2013, unchanged from the last survey, and 12,4 percent in 2014, 0,2 points higher that first forecast. In 2015, the jobless rate is expected to fall to 11,8 percent, but not as steeply as the 11,6 percent initially pencilled in.

The survey was conducted between July 16 and 19 and drew 51 respondents.

- AFP.
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