The European Commission, in its spring economic forecasts, said today it expected the 12-nation euro zone to grow by an average of 1.4 per cent this year, and 2.9 per cent in 2003.
In the whole of 2001 euro-zone economies grew by 1.5 per cent although they contracted by 0.2 per cent in the last quarter.
For the entire 15-nation European Union, the commission forecast growth in 2002 of 1.5 per cent and 2003 growth of 2.9 per cent, after 1.6 per cent last year. In 2000 the economies of both zones grew by 3.3 per cent.
The commission commented in a summary of its semi-annual outlook: "A gradual recovery is shaping up as confidence returns, depleted inventories are rebuilt and international trade picks up."
The recovery would gather momentum in the first half of this year owing to private consumption before accelerating further in the second half, it said.
"An average (euro-zone) growth of close to 3.0 per cent is forecast for next year," the commission added.
Yesterday the president of the European Central Bank, Mr Wim Duisenberg, said that the euro zone was set for recovery although the strength of the upturn was not clear.
But the ECB warned that growth would be damaged if euro zone countries did not eradicate their public deficits as they are committed to doing, and that pressures wage increases were causing concern on the inflation front.
In Berlin, six leading German forecasting institutes said yesterday that Germany, the biggest economy in the 12-nation euro zone, was on the verge of recovery.
"In the spring of 2002, the German economy is at the start of an upturn," they said, forecasting growth of 0.9 per cent this year and 2.4 per cent in 2003 after 0.6-per cent growth last year, a performance which undermined confidence throughout Europe.
The EU Commission said today it expected 1.8 million jobs to be created in the euro zone over the next two years, and estimated that inflation would remain close to 2.0 per cent both this year and next.
Despite a "temporary" rise in unemployment this year, the EU's executive branch said: "Employment creation will continue and 1.8 million new jobs are expected to be created in the euro area over the next two years."
In fact, the commission said, the average unemployment rate was likely to fall below the 2001 level of 8.3 per cent.
Inflation, currently at 2.2 per cent, was expected to fall in the second quarter of 2002, reaching an average of "close to 2.0 per cent for both this year and next".
AFP