Intellectual Thoughts by Sanjay Panda: Euro economy to barely grow in 2009

Euro economy to barely grow in 2009

The European Commission said the region's economy probably entered a recession this year and will stagnate in 2009.Economic growth in the euro area will slump to 0.1 percent next year, the worst performance since 1993, It also estimated that gross domestic product will shrink for three consecutive quarters this year and cut its forecast for full-year 2008 growth to 1.2 percent from 1.3 percent previously. Manufacturing contracted at a record pace in October and faster than initially estimated.

In addition to flooding markets with cash, central banks across the world have also begun slashing interest rates to limit the economic impact of the financial crisis. The European Central Bank is set to cut its benchmark rate this week for the second time in less than a month after the U.S. Federal Reserve lowered its rate to match the lowest level in a half-century. Policy makers in Japan, India and Norway have also cut borrowing costs.

The Irish, Spanish and U.K. economies will all contract next year, while Germany, Europe's largest economy, France and Italy will stagnate. For 2010, the EU sees the overall euro-area economy expanding by 0.9 percent.

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