The euro zone economy will contract twice as much as previously expected this year, according to a survey of forecasting experts published today by the European Central Bank.
The projections - used by the bank to draw up its own forecasts - showed that output is likely to shrink by 3.4% in 2009. This compared to the 1.7% contraction rate expected in February.
However, the 16-country economy is seen creeping slowly back into the black in 2010, with output expanding by 0.2%.
The ECB surveyed 52 forecasting experts from around Europe for the regular study, published in its monthly bulletin.
Inflation in the zone is seen well under the ECB's 2% threshold both this year and next, at 0.5% on average in 2009 and 1.3% in 2010. The inflation forecasts were also revised down sharply.
Last week, the ECB cut interest rates in the euro area to a record-low 1% and also announced a plan to pump €60 billioninto the finance system.
