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EU predicts economic recovery at 'modest pace' next year; too much debt, not enough investment

BRUSSELS – The European Union on Thursday predicted the region’s economic recovery will continue at “a modest pace” next year thanks to low oil prices and central bank stimulus, but remains hampered by low investment and high debt.

In an official forecast, European Commissioner Pierre Moscovici warned of uneven improvements across the 28 member states but said that for 2016, the EU economies will “see growth rising and unemployment and fiscal deficits falling.”

The recovery is being supported by several temporary factors, including low energy prices, the euro’s drop in currency markets — which helps exporters — and monetary stimulus from the European Central Bank.

Moscovici noted the global economic outlook remains uncertain, meaning EU nations should not to let up in their efforts to reform their economies.

The 19-nation eurozone is expected to see its economy grow by 1.6 per cent this year, 1.8 per cent next year and 1.9 per cent in 2017.

The 28-nation bloc, taking account of Britain and other non-euro nations is expected to see growth of 1.9 per cent, 2.0 per cent and 2.1 per cent over the same periods.

Greece, which received a new three-year bailout program, is expected to see its economy shrink by 1.4 per cent this year and 1.3 per cent in 2016, before seeing growth of 2.7 per cent the next year.

Greece is also expected to have the highest unemployment rates over the next years, with 25.7 per cent this year easing only slightly to 24.4 per cent by 2017.

Overall in the EU, “unemployment will continue to fall while remaining too high,” Moscovici said. Eurozone unemployment is forecast to ease from 11 per cent this year to 10.3 per cent in 2017. For the EU, joblessness is predicted to fall from 9.5 per cent this year to 8.9 per cent in 2017.