The European Commission is forecasting slow recovery next year and into 2004 across the European Uni...
The European Commission is forecasting slow recovery next year and into 2004 across the European Union as budget deficits widen and international export markets fail to bounce back dramatically.
Most dramatically, the commission says that moves to unleash growth in the US economy by cutting interest rates is losing its impact, and it does not expect any significant improvement in growth rates there until mid-way through next year.
Elsewhere the picture is better, with Japan on the way out of recession in the eyes of the commission's economists and markets such as Canada, Australia and New Zealand performing well along with certain economies across Asia.
Global GDP growth is expected to come in at around 2.6% this year, rising to 4% by 2004.
However, current growth in the UK is looking positively dynamic compared to the 0.8% rate in the eurozone.
The commission blames this anaemic growth on the current downward business cycle not being complete - with lots of over-investment and over-capacity of supply yet to be cleared - and on poor investor confidence caused by collapsed stock markets and fears of war with Iraq.
Key to growth rates next year will be oil prices: if oil falls below $21 per barrel by the second half of 2003 its current forecast will hold, but if it stays at its current $30 level throughout next year inflation could run at 0.75% higher than predicted while forecast growth rates would need to be cut by up to 0.5%.
Continued stubborn unemployment rates will also be a problem next year, with forecasts of an average 8.3% unemployment rate across the eurozone.
In some economies such as the Netherlands and Portugal unemployment may continue to rise.
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