European Commission expects Eurozone growth rate to pick up in 2013

European Commission's economic forecasts published on Friday suggest that in 2013 we will see a gradual recovery in economic activity in the Eurozone. It should initially be driven by an improvement in external demand and later by an increase in domestic investment and consumption.

Germany's 2013 GDP forecast was cut to 0.5%, from the November estimate of 0.8%, as the slowdown at the end of 2012 is expected to weigh on activity this year. The estimate for the 2013 UK GDP was held at 0.9%, but the projection for 2014 was reduced to 1.9% from the previous 2%. The EC also said that UK inflation would decline at a slower rate than expected.

As far as Greece is concerned, the European Commission saw it beginning to recover at the end of 2013, thanks to its strengthened economic adjustment program, and growing by 0.6 in 2014. Still, the GDP estimate for this year was revised from -4.2% to -4.4%.

The inability to cut deficit to 3% by the French government will result in an almost stagnant growth in France in 2013, compared with the previous prediction of +0.8%. The deficit is expected to reach 3.7% this year, and in case of insufficient action to lower it, in 2014 it will climb to 3.9%.

Additionally, the European Commission declared that it does not expect further Spanish bank aid disbursements in the nearest future.