The European Union (EU) economy is getting out of recession after hard hit by the financial crisis, but uncertainty remains high, the European Commission said in a report on Monday.
"The situation has improved, mainly due to the unprecedented amounts of money pumped into the economy by central banks and public authorities, but the weak economy will continue to take its toll on jobs and public finances," said EU Economic and Monetary Affairs Commissioner Joaquin Almunia.
According to the commission's interim forecast released today, both the EU and eurozone economy will return to positive growth in the third quarter of this year, increasing by 0.2 percent over the previous three months after continuous decline following the outbreak of the financial crisis.
For the last quarter of 2009, economic growth in both areas will be slightly lower at 0.1 percent, but the commission kept its previous forecasts for the whole year of 2009 unchanged, saying both the EU and the euro zone will see a yearly contraction of four percent.
"As economic activity at the end of 2008 and beginning of 2009 was worse than initially estimated, GDP (gross domestic product) is still expected to fall by four percent overall this year in both the EU and the euro area, as forecast in the spring," the commission said.
In the first quarter of this year, the EU and eurozone economy declined by 2.4 percent and 2.5 percent from the previous quarter respectively as the financial crisis, which broke out last September, took its toll on the real economy.
Thanks to massive stimulus measures implemented by member states and helped by improved financial conditions, the fall in the EU and eurozone economy slowed significantly in the second quarter.
With the inventory cycle at a turning point and confidence improving in almost all sectors and countries, the commission said the near-term outlook is favorable.
However, it warned that while the recovery may surprise on the upside in the very short term, how sustainable it will be remains to be seen.
"Uncertainty remains rife," the commission said, adding the full impact of the crisis on labor markets and public finances is still to come, and the correction in housing markets continues to hold back construction investment in several EU countries.
(Xinhua News Agency September 14, 2009)
