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Tuesday 16 September 2014

ECB slashes forecast for eurozone economy, return to growth in 2014

Sakari Suoninen

Published 06/12/2012 | 12:49

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European Central Bank (ECB) President Mario Draghi speaks during a news conference in Frankfurt, November 8, 2012. The European Central Bank held its main interest rate at 0.75 percent on Thursday, deferring any cut in borrowing costs while it assesses the extent of the euro zone's economic downturn and waits for a cue to use its new bond-purchase programme. REUTERS/Lisi Niesner (GERMANY - Tags: BUSINESS)

THE European Central Bank slashed its forecasts for the eurozone economy on Thursday, showing a contraction next year was very likely before a return to growth in 2014.

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The ECB cut its estimate of gross domestic product (GDP) for next year to between a fall of 0.9pc and growth of just 0.3pc.

The bank also cut its forecast marginally for 2012, giving a midpoint of -0.5pc compared to -0.4pc three months ago.

It had previously forecast -0.4pc to 1.4pc for 2013, suggesting the economy was more likely to grow than contract.

"Economic weakness in the eurozone is expected to extend into next year," Draghi said. "A gradual recovery should start later in 2013."

In their first forecasts for 2014, ECB staff forecast GDP growth of 0.2 to 2.2pc.

The December macroeconomic projections also lowered forecasts for inflation next year to between 1.1 and 2.1pc from a previous forecast of 1.3-2.5pc

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