The EU economy is estimated to be currently in a mild recession. But a slow recovery is forecast from the second half of the year.
According to the spring forecast released on 11 May, real GDP is expected to stagnate this year in the EU and to contract slightly in the eurozone. However, the steps taken by the EU to tackle the debt crisis have helped to ease financial market tensions. Assuming that investors and consumers regain a measure of confidence, domestic demand can be expected to recover gradually.
Growth is expected to pick up in the second half of 2012 and gather speed in 2013. GDP is projected to stagnate in the EU and contract by 0.3% in the euro area this year, and to grow by 1.3% in the EU and by 1.0% in the euro area in 2013.
Nevertheless, the situation remains fragile and the pace of the recovery will be unequal across EU countries, notably due to different structural challenges, financing costs and public finances sustainability.
Overall, the expected return to growth should ease conditions on labour markets in 2013. But it will take some time until this is reflected in the unemployment rate, which is expected to remain at 10.3% in the EU and at 11% in the euro area in 2012 and 2013.
Despite the drop in output during 2011, public finances in the EU improved significantly. Budget deficits are expected to decline further in 2012 and 2013.
Inflation is expected to slow gradually and fall below 2% in 2013.