Europe has received more bad economic news, with the 27-member European
Union announcing the business downturn would be far worse this year
than its earlier predictions.
The European Union's economy is
expected to shrink by four percent this year - more than twice what was
estimated in January. And that is only part of the grim news that was
delivered by the European Commission - the bloc's executive arm.
in the 27-member EU is expected to reach 11.5 percent by 2010 - the
highest level since World War II. And as governments invest heavily in
economic stimulus plans, their deficits are expected to soar to about
7.5 percent of gross domestic product - more than twice the limit
allowed under EU rules.
But EU economic commissioner Joaquin
Almunia tried to offer a bright side to the gloomy news he delivered to
reporters in Brussels.
"Some positive signals have appeared in
the last weeks, including the evolution of the financial markets,
improvement in business expectations and some real indicators, such as
export data in Asia, pointing, all of them, to a stabilization of the
economy in the second part of this year and a gradual recovering in
2010," Almunia said.
Situation likely to get worse
But the economic situation is likely to get
worse in Europe before it gets better. The European Union predicts the
German economy, Europe's largest, is likely to contract by 5.4 percent
this year, a larger decline than the EU average. The Latvian economy
is expected to be hit even harder, shrinking 13.1 percent in 2009,
while Ireland's economy is expected to shrink by nine percent.
European Union predicts the bloc may begin to slowly recover next year,
but only if the banking system and international trade pick up.