Friday, November 18, 2011

EU economic recovery stalls; growth forecasts point to deep recession

The first line of the European Commission's press release was stark and scary.

"The recovery of the EU economy has stopped."

The impact of deepening fear and suspicion in the Commission's Autumn forecasts for 2011-13 reveal that "growth is at a standstill"  - perhaps the best case scenario given the deepening sovereign debt woes.

Growth is projected to stagnate well into 2012 and is expected to flatline at just 0.5 percent over the full year.

The best outlook is a return to slow growth of just 1.5 percent by 2013.

The uncertainty and outright fear engulfing Europe is now hitting investment and consumption while weakening global growth is holding back exports.

I outlined the impact of EU stagnation on the rest of the world on 11 November, when I spoke from Brussels to the AM program.

Later in the day, I updated the deepening crisis in Italy and the potential for severe consequences of a Eurozone breakup in this interview with "The World" on ABC News 24.

Note: I was in Brussels on a journalist study tour hosted by the European Commission.

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