World economic growth to slow down

LONDON, Jan 20 (PTI): The world economic growth is projected to come down to 0.5 per cent this year whereas the European economy is anticipated to witness much worse trends, with the GDP in the region expected to shrink 1.8 per cent, the European Commission says.

According to the Commission, world GDP would slow down to 0.5 per cent this year from 3.3 per cent in 2008. The European Union economy is projected to shrink as much as 1.8 per cent this year, the Commission said in a statement.

“Starting in the second half of 2009, global growth is expected to rise gradually but moderately as the financial market situation improves and the impact of the macroeconomic policy easing (not least in the US) gains traction.

“Overall, global GDP growth is expected to be around 2.75 per cent in 2010,” it said.

On the other hand, the data released by the Commission shows that the European Union’s economy is expected to grow marginally by 0.5 per cent in 2010.

“GDP growth in EU is expected to fall by 1.8 per cent in 2009 before recovering moderately to 0.5 per cent in 2010.

“This is the result of the impact on the real economy of the intensified financial crisis, the ensuing global downturn manifested in the severe contraction of the world trade and manufacturing output...,” the statement said.

The Commission pointed out that the “severity of the economic downturn will have a significant impact on employment and public finances over the forecast horizon”.

The employment growth is expected to turn negative this year, with EU employment falling by 3.5 million jobs.

On the other hand, the Commission noted that real GDP in the Eurozone — the group of 16 nations that share euro as the common currency — would fall by 1.9 per cent in 2009 before recovering 0.5 per cent in 2010.

The economy is projected to have “dropped to about one per cent in 2008 in both the EU and the euro area, from just below three per cent in 2007,” the statement said.

Ironically, the Commission in its November projection had estimated Eurozone economy to grow 0.1 per cent this year.

Moreover, the current forecast is much worse than a contraction of 0.5 per cent, projected recently by the European Central Bank.