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Slowing GDP Growth Confirmed for Eurozone

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Slowing GDP Growth Confirmed for Eurozone

The Eurozone economy expanded at a rate of 0.1 percent in the third quarter, confirming the revised estimate published last month.

Gross domestic product for the now 18-nation currency bloc declined 0.3 percent over the previous year, official estimates from the European Commission showed. Growth was steadier in the broader European Union, with GDP expanding 0.2 percent, higher than the previous estimate of 0.1 percent.

Among Eurozone member-states, Ireland experienced the highest rate of growth during the third quarter, expanding 1.5 percent, followed by new member-state Latvia at 1.3 percent. Cyprus experienced the biggest decline at 0.8 percent, followed by Malta, which contracted 0.4 percent. France, the euro area’s second-largest economy, contracted at a quarterly rate of 0.1 percent, revised estimates confirmed.

Deflationary pressures continue to threaten the Eurozone’s fragile recovery, forcing the European Central Bank to adopt a rhetoric of ‘any means necessary’ to ensure markets the central bank won’t abandon its growth objective. The Eurozone economy could grow by as much as 1 percent this year, according to a revised forecast from the Organisation for Economic Cooperation and Development.

Perhaps more troubling than the currency bloc’s current woes are its projected ones. Economic growth is expected to hover around 1 percent over the next decade if governments don’t adopt new policies, according to the Commission. That’s about half the growth rate experienced in the ten years before the debt crisis began.

“Medium-term projections for the euro area don’t give grounds for excessive optimism,” said Marco Buti, who heads the European Commission’s economic department. “Policy makers can avoid the dire growth scenario by implementing reforms that contribute to enhancing the economy’s full potential.”

Such reforms, outlined in the European Commission’s quarterly report, aren’t “overly ambitious,” and could result in GDP expanding by 6 percent after five years.

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