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Spring economic forecast: European recovery maintains momentum - 13/05/2011

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The EU economy is set to further consolidate its gradual recovery, growing by around 1¾% in 2011.

The EU economy is set to further consolidate its gradual recovery, with prospects for 2011 looking slightly better than projected last autumn. Gross domestic product is expected to grow by around 1¾% this year and just under 2% in 2012.

This outlook is supported by better prospects for the global economy and generally upbeat EU business sentiment.

Inflation, however, is rising faster than GDP, while unemployment is coming down more slowly.

Commodity prices driving inflation

The inflation trend reflects the increase in commodity prices, one of the most important new challenges that have emerged since the autumn. Inflation is projected to average almost 3% in the EU and 2½% in the eurozone this year, before easing to about 2% and 1¾% respectively in 2012.

Meanwhile, labour-market conditions are expected to slowly improve over the next year and a half. The unemployment rate is expected to fall by just ¼ of a percentage point to around 9¼% in 2012.

Public finances are improving, with the budget deficit set to come down to about 3¾% of GDP by 2012. The prospects continue to vary considerably among EU countries, however.

The Commission publishes economic forecasts four times a year. The comprehensive spring and autumn forecasts cover growth, inflation, employment and public budget deficits and debts for all EU countries and several non-EU countries.

The smaller interim forecasts – normally published in February and September – review developments since the preceding forecast for the largest economies only.

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