European Union

European economy to slowly recover from mid-2012: EU's Rehn

BRUSSELS, May 11 (Xinhua) -- The European economy is suffering a mild and short-lived recession and is expected to witness a slow recovery at the start of the second half this year and the next year, European Union (EU) Economic and Monetary Affairs Commissioner Olli Rehn said Friday.

Real economy is projected to stagnate in the EU and to contract by 0.3 percent in the euro area in 2012, said Rehn, citing a new forecast by the European Commission, which remain unchanged from the previous one released in February.

Thanks to "an expected acceleration in global growth" and "strong policy actions taken by the EU" that had brought about an easing of financial market tensions, the recovery of the European economy is forecast to set in slowly from the second half of the year on, Rehn said.

The Commission painted a more optimistic picture for 2013, with the economy expected to grow 1.3 percent in the EU and 1 percent in the euro area.

However, Europe is likely to continue witnessing high jobless rates due to the slowdown in economic activity. Unemployment rate is expected to remain high at 10 percent in the EU and 11 percent in the euro area in 2012, according to the forecast.

The Commission also expected inflation in Europe to "moderate gradually" in 2012 and fall back to below 1.8 percent in 2013 as the impact of higher oil prices and tax increases fades away and the economic slowdown reduces underlying domestic price pressures.