BELGIUM

GDP revised down

2012   2013   2014

-0.2%  0.2%   1.5% (Feb 2013)

-0.2%  0.7% (Nov 2012)

Unemployment

7.3%  7.3%   7.4% (Feb 2013)

Sluggish growth is forecast with slow growth in disposable income because of a “still uncertain economic environment”. Domestic demand is suffering due to credit tightening in the private sector. The government missed its own deficit target of 2.8% of GDP in 2012 (it is expected to be 3%). Weaker-than-expected growth means the deficit will rise further, to 3.2% in 2014.

CYPRUS

GDP revised down

2012   2013   2014

-2.3% -3.5%   -1.3% (Feb 2013)

-2.3%  -1.7% (Nov 2012)

Unemployment

12.1% 13.7% 14.2% (Feb 2013)

A prolonged recession is on the cards as domestic demand and consumption and private investment plummets. Further declines mean that the economy is likely to deteriorate further over the next two years as unemployment rates jump to record high levels. Government deficit is expected to be reduced gradually.

FRANCE

GDP revised down

2012   2013   2014

0%       0.1%    1.2% (Feb 2013)

0.2%   0.4% (Nov 2012)

Unemployment

10.3% 10.7% 11.0% (Feb 2013)

Public finances are under strain because of a delayed recovery. There will be a persistent rise in unemployment “despite the ongoing efforts to reform the labour market”. France is expected to miss its deficit-reduction targets by some margin – in 2012 it is expected to be 4.2% of GDP, down from 4.6%. It is expected to reach 3.7% in 2013, significantly above the 3% target. The Commission expects the deficit to deteriorate “marginally” in 2014.

GREECE

GDP revised down

2012   2013  2014

-6.4% -4.4%  0.6% (Feb 2013)

-6.0% -4.2% (Nov 2012)

Unemployment

24.7% 27.0% 25.7% (Feb 2013)

All eyes are on 2014, when the European Commission expects the recovery to begin in this troubled country. Until then the “deep crisis” remains. Far-reaching labour market reforms and liberalisation will “encourage job creation when the economy picks up”. Bank recapitalisation means capital can return to the country and analysts expect consumers and investors to start regaining confidence in 2014. Government debt is expected to rise from 162% of GDP to 176% in 2013 but the deficit is likely to decrease to 4.6%.

ITALY

GDP revised up for 2013, down for 2014

2012   2013  2014

-2.2% -1.0%   0.8% (Feb 2013)

-2.3% -0.5% (Nov 2012)

Unemployment

10.6% 11.6% 12.0% (Feb 2013)

Italy is in a “protracted recession” but analysts expect this to bottom- out towards the middle of this year. Government cuts, tight financing conditions and a significant fall in domestic demand have badly affected investment and consumption. The import market collapsed while exports increased. Investment will decline further and the recession will continue in the first half of 2013. The government’s deficit is falling and “thanks to the full implementation of consolidation measures adopted in 2011-12” it will narrow further to 2.1% this year.

THE NETHERLANDS

GDP revised down

2012  2013  2014

-0.9% -0.6% 1.1% (Feb 2013)

-0.3% 0.3% (Nov 2012)

Unemployment

5.3% 6.3% 6.5% (Feb 2013)

Real GDP decreased by 1% in the third quarter of 2012 with net exports, which had been sustaining growth for more than a year, turning strongly negative. This, allied with a rapid decline in domestic consumption and a difficult situation in the housing market – with a very sharp drop in activity in the construction sector – means that there has been a significant fall in GDP. Domestic demand is set to remain weak, unemployment is on the rise and although there has been an improvement in deficit levels, it has been slow and will miss targets.

PORTUGAL

GDP revised down

2012   2013  2014

-3.2% -1.9%  0.8% (Feb 2013)

-3.0% -1.0%  (Nov 2012)

Unemployment

15.7% 17.3% 16.8% (Feb 2013)

It was hoped that Portugal was on the road to recovery but now analysts are not so sure. The annual growth rate in 2012 was -3.2%, worse than predicted in last autumn’s forecast. This deterioration was driven by contraction of domestic demand, soaring unemployment and deceleration of exports. A mild recovery is now expected in the second half of 2013. The government is struggling to get its deficit down – it is expected to have narrowed to 2.9% of GDP in 2014 from 5% in 2012, but this “hinges on the projected economic recovery starting from mid-2013”.

SLOVENIA

GDP revised down

2012   2013   2014

-2.0%  -2.0%  0.7% (Feb 2013)

-2.3%  1.6% (Nov 2012)

Unemployment

9.0% 9.8% 10.0% (Feb 2013)

Slovenia is experiencing a double-dip recession and the growth potential is going to get worse before it gets better. A sluggish recovery can be expected in 2014 but this will depend on a “swift resolution of the banking crisis and a successful restructuring of the over-indebted corporate sector”. The Commission says that deterioration of domestic demand is down to a delay in “urgently required balance-sheet repair and adverse labour market dynamics”. The public deficit is expected to narrow before widening again to 5.1% of GDP in 2013. But even this target is at serious risk of being missed.

SPAIN

GDP revised down

2012   2013  2014

-1.4% -1.4%   0.8% (Feb 2013)

-1.4% -1.4% (Nov 2012)

Unemployment

25.0% 26.9% 26.6% (Feb 2013)

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There appears to be some light at the end of the tunnel. The European Central Bank’s announcement of a bond-buying programme and the recapitalisation and restructuring of the country’s financial sector mean immediate financial-market pressure has disappeared. However, the “protracted correction of the large external and internal imbalances accumulated in the boom period” means that private consumption and investment are still at very low levels. GDP is expected to contract further and rebalancing will continue for several years but exports are strong, the deficit is narrowing and an adjustment between wages and unemployment should mean that unemployment begins to fall slowly from record levels.