EU Economic and Monetary Affairs Commissioner Mr Pedro Solbes said yesterday that short-term prospects for the European economy were drab.
"The short-term prospects for the European economy are not very favourable," he said, blaming the weakness on subdued global trade, high oil prices, a three-year stock market slump and flagging investment.
Several analysts forecast Europe would probably escape a recession but said they also did not expect strong near-term growth by the continent's fragile economies.
Mr Solbes said unemployment was expected to continue rising and oil price hikes could fuel inflation until the second half of the year. "Recent survey indicators paint a bleak picture of euro-area activity, with weakening consumer confidence and industrial confidence moving sideways," he added.
The EU commissioner noted that gross domestic product growth had slowed in the last quarter of 2002, while net exports had fallen and the main contribution to growth had come from domestic demand.
Job creation stalled recently, said Mr Solbes, adding that, given the weak outlook for economic growth, unemployment was expected to continue rising after moving up slowly but continuously throughout 2002.
