Grim EU forecast on growth, jobless rate

The euro symbol is reflected outside the headquarters The euro symbol is reflected outside the headquarters of the European Central Bank in Frankfurt, Germany. (Nov. 5, 2012) Photo Credit: Getty

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Europe's economy is still reeling and unemployment could remain high for years despite the progress made in solving the debt crisis, the European Union warned Wednesday, as it downgraded next year's forecasts for the 27-country bloc.

The European Commission, the executive arm of the EU, on Wednesday revised down its forecast for the region's gross domestic product, which it now expects to grow by just 0.4 percent in 2013, compared with its expectations this spring of 1.3 percent growth.

The commission had previously expected the 17 countries that use the euro to find their footing next year, with 1 percent growth. Now it predicts only a 0.1 percent uptick.

The report also suggests that unemployment won't start falling until 2014 -- and then only slightly.

"Europe is going through a difficult process of macroeconomic rebalancing and adjustment, which will last for some time still," Olli Rehn, the EU's economic and monetary affairs commissioner, told reporters.

The unemployment rate across the eurozone is at a record high of 11.6 percent.

The commission's report also confirms that the crisis is also not sparing Germany, Europe's largest economy.

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It predicted that Germany would eke out just 0.8 percent growth in 2012.

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