Italy and France to lag Germany in euro zone recovery

Tue Feb 25, 2014 8:45am EST
 
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By John O'Donnell and Robin Emmott

BRUSSELS (Reuters) - Germany is set to accelerate away from France and Italy in 2014 as the fragmented euro zone economy gradually recovers from its worst crisis, the European Commission said on Tuesday.

In a departure from the gloom of recent years, Brussels slightly increased its growth prediction for the bloc's 9-trillion-euro economy to 1.2 percent in 2014 from an earlier 1.1 percent.

It was powered chiefly by an expected 1.8 percent jump in the euro zone's biggest economy Germany.

The statistics also made clear the scale of the challenge facing Italy and its new prime minister, Matteo Renzi, in turning around the bloc's third-largest economy. The Commission predicts meager growth of 0.6 percent this year.

No.2 economy France is expected to grow 1 percent in 2014.

For the bloc as a whole in 2015, the commission raised its forecast slightly to 1.8 percent.

"Recovery is gaining ground," said Olli Rehn, the EU commissioner in charge of economic policy. "The worst of the crisis may now be behind us," he said, cautioning, however, that the recovery was "still modest".

The improving growth outlook will relieve the European Central Bank, but policymakers there will also have to grapple with forecasts showing persistently low inflation and no significant drop in the region's record unemployment rate.   Continued...

 
Vice-President of the European Commission Olli Rehn speaks during the event hosted in honour of the Euro introduction in Latvia in Riga January 10, 2014. REUTERS/Ints Kalnins