EU: Economic Demand Will Disappoint In 2003

By John S. McClenahen Manufacturers shouldn't look to the 15-nation European Union to bring them into business recovery this year. The latest forecast from the European Commission, the EU's executive branch of government, anticipates only 1.3% average growth in GDP in the EU -- and just 1% among the 12 EU nations using the euro as their common currency. Neither projected figure is much better than last year's growth of 1.1% for the EU and 0.9% for the euro-using countries. Higher oil prices and an increase in indirect taxes in Europe are likely to keep inflation from falling below an average mark of 2% in the euro area until 2004, say the commission's economists. This year, inflation is likely to average 2.1%. On the jobs front, labor markets are now starting to weaken across Europe. The commission forecasters foresee 100,000 jobs being lost among the 12 euro-using nations this year, the first decline since 1994, and the unemployment rate rising to 8.8%.

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