The European commission has published its Interim Forecast to 2010. The euro zone economy will contract for the first time this year and barely grow in 2010 while inflation will remain below the European Central Bank target.
The Commission said gross domestic product in the 16 countries using the euro would shrink 1.9 per cent in 2009, and grow only 0.4 per cent in 2010.
Annual inflation would be 1 per cent in 2009 and 1.8 per cent 2010, the Commission forecast.
The European Central Bank wants to keep inflation below, but close to 2 per cent and has cut interest rates by a total of 225 basis points in four moves since October as the economy and inflation slow sharply.
The bank forecast on December 4th that 2009 growth in the euro zone would be in a range of -1.0 to 0.0 per cent and between 0.5 and 1.5 per cent in 2010.
The ECB forecast inflation in 2009 in a range of 1.1 to 1.7 per cent and 1.5 to 2.1 per cent in 2010.