Recessie eurozone nog niet voorbij (en)
EUOBSERVER / BRUSSELS - A new survey released by the European Central Bank (ECB) on Thursday (14 May) suggests the euro area economy will contract by twice as much this year as previously predicted, dampening recent talk of the green shoots of recovery and an end to the recession.
Conducted among 52 forecasting experts from across Europe, the ECB survey predicts GDP growth for the 16-member area is likely to shrink by 3.4 percent in 2009, a significant deterioration on a similar February forecast of a 1.7 percent decline.
However, the experts predict the area's growth will edge back into positive territory in 2010, with a modest expansion of 0.2 percent expected.
The news comes despite the extensive measures taken by the bank since the recession started.
These include the cutting of interest rates to a record low of one percent last week, coupled with the announcement of plans to buy €60 billion of covered bonds held by banks.
That decision is already yielding results, with Banco Santander issuing the first Spanish covered bond this week for over a year to strong demand.
The EU is also co-ordinating a €200 billion stimulus package announced last December that is being implemented on a national basis.
However, on Thursday Swedish finance minister Anders Borg said that figure might not be enough, suggesting some areas may require further stimulus spending.
Sweden is to take over the EU's six-month rotating presidency in July, casting Mr Borg as an important economic decision-maker as chair of regular EU finance minister meetings.
Despite raising the spectre of further stimulus spending, Mr Borg warned an audience of economic policy makers in Brussels over the dangers of rising budget deficits.
"There is a great demand for responsible fiscal policy in the future," he said.
Spanish troubles
One country where the prospect of a rapid exit from the recession seems unlikely is Spain.
The once booming southern European economy has seen one of the greatest reversals of fortune among EU member states.
On Thursday, the country's national statistics office released new data showing that the Spanish economy in the first quarter of this year contracted by its fastest rate in at least 40 years.
Added to this is the problem of rising unemployment, recorded at 17.4 percent in March, the highest of any EU member state.
The statistics office said preliminary data show that the economy contracted by 1.8 percent in the first quarter of this year compared to last quarter of 2008, when the country entered into recession.
Prior to this, Spain had enjoyed 14 years of consecutive growth.
The collapse in the country's construction sector is a principle factor behind the change in fortunes, with the European commission recently predicting that Spain will be the last EU economy to recover from recession, probably in 2011.
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