MercoPress. South Atlantic News Agency

Euro zone economy in recession will begin to recover in 2010

The Euro zone economy will shrink 1.9% in 2009 and grow by only 0.4% n 2010, the European Commission has forecast. The Commission said in a statement that the whole European Union was facing a “deep and protracted recession”.

Unemployment in the 16 countries using the Euro is expected to exceed 10% in 2010, up from 7.5% in 2008. The commission hopes it will be possible "to create the conditions for a gradual recovery in the second part of 2009" in the Euro zone economy. Economy Commissioner Joaquin Almunia said in a statement it would be achieved through "measures to stabilise the financial markets, the easing of monetary policy and the economic recovery plans". The commission said annual inflation in the 16 countries using the Euro would be 1% in 2009 and 1.8% a year later. According to official figures, the Euro zone has been in recession since September of last year. "As events unfolded late last autumn, it became increasingly clear that the EU would not be spared a deep and protracted recession," the commission said. It added that "the outlook is for a continued fall in GDP throughout the first half of this year Last week, Germany became the latest country to unveil an economic stimulus package worth about 50bn Euros to kick-start Europe's largest economy. Euro zone's key interest rate is now at 2%, its lowest level since December 2005. Last week the European Central Bank on the basis of its regular economic and monetary analyses reduced the interest rate on the main refinancing operations of the Euro system by a further 50 basis points, (effective January 21st.) bringing the total reduction since 8 October 2008 to 225 basis points. ECB said the decision follows confirmation that inflationary pressures have continued to diminish, owing in particular to the further weakening in the economic outlook