EU GDP growth expected to fall in 2009 but climb back in 2010.

GDP growth in the European Union is expected to fall by 1.8% in 2009 before a minor recovery to 0.5% in 2010, according to interim forecasts by the European Commission. The forecasts for 2009-10 show a sharp downturn in growth fuelled by the worsening financial crisis.

The severity of the downturn will impact significantly on employment and public finances over the forecast period. However, government consumption and public investment will continue to provide relief.

Economic and Monetary Affairs Commissioner Joaquín Almunia said: ‘The measures to stabilise the financial market, the easing of monetary policies and the economic recovery plans will enable us to create the conditions for a gradual recovery in the second part of 2009.’

Almunia said the main priority was to ‘improve the flows of credit at reasonable prices’ and ‘implement the fiscal stimulus packages quickly to stimulate investment and private consumption’.

World GDP growth in 2009 is projected to slow to 0.5% from 3.3% in 2008, with growth expected to rise gradually but moderately in the second half of this year.

Read more about EU GDP 2010 projections here.

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