WASHINGTON, DC: Europe is heading towards a sharp economic downturn, as the fifteen countries in the Eurozone see growth slow to an average of 1.3% in 2008 and 0.2% in 2009, according to figures published in the IMF's latest World Economic Outlook.
Unemployment is also forecast to increase from an average 7.6% to 8.3% in nations commited to the Euro, just one sign that they are either "moving close to or into recession".
Germany's economy – the continent's biggest – will remain flat in 2009, while France will register growth of just 0.2%, and Spain and Italy will register declines of 0.2%.
The report did predict, however, that falling property prices would be less damaging in Europe than the US, as a result of higher savings rates, lower debts, tighter mortgage lending and fewer opportunities to withdraw equity.
So while the housing crisis would have "an appreciable short-term impact" in nations like the UK, Ireland and Spain, countries such as Germany, Switzerland and Austria are at less risk.
The report also urged members of the European Union to pursue "joint responsibility and accountability for financial stability", as "restoring confidence now requires a decisive commitment to concerted and coordinated action."
Data sourced from Bloomberg (Germany); additional content by WARC staff