Key points for EU
Real GDP is projected to stagnate in the EU and to contract by -0.3% in the euro area in 2012. For 2013, growth is forecast at 1.3% in the EU and 1.0% in the euro area.
EU employment is forecast to contract by 0.2% in 2012 (0.5% in the euro area), followed by a gradual improvement in 2013.
Public finances in the EU improved significantly in 2011 and this trend should continue, with public deficits in 2013 declining to 3.3% in the EU and just below 3% in the euro area.
Unemployment is expected to remain high at 10% in the EU and 11% in the euro area over the forecast period. Inflation is set to moderate gradually and fall back to below 1.8% in 2013, as the impact of higher oil prices and tax increases fades away.
The main downside risk remains an aggravation of the sovereign-debt crisis with financial contagion and a sharp drop in credit availability. Another prominent risk stems from geopolitical uncertainty that could lead to a surge in oil prices.
Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro said: "A recovery is in sight, but the economic situation remains fragile, with still large disparities across Member States. We are witnessing an ongoing adjustment of the fiscal and structural imbalances built up before and after the onset of the crisis, made worse by the still weak economic sentiment Without further determined action, however, low growth in the EU could remain. Sound public finances are the condition for lasting growth, and building on the new strong framework for economic governance, we must support the adjustment by accelerating stability and growth-enhancing policies."