Geneva, 20 January — The end of the recession in Western Europe will bring an increase in economic activity in the region in 2014, but growth will be slow and high unemployment will persist, according to the United Nations World Economic Situation and Prospects 2014 (WESP) released today.
Economic growth, as measured by gross domestic product (GDP) for Western Europe is expected to increase by 1.5 per cent in 2014 and 1.8 per cent in 2015. However, the report states that growth will be uneven among countries. The United Kingdom’s economy is expected to grow 2.2 per cent in 2014, while France and Germany are expected to grow 0.8 per cent and 1.9 per cent in 2014, respectively.
Countries hit hardest by the euro crisis are showing signs of improvement, the report says, while warning that they are still in delicate positions. Italy is expected to contract by 1.8 per cent in 2013 before finally exiting recession and growing by 0.8 per cent in 2014. Similarly, Spain is expected to contract by 1.2 per cent in 2013, before returning to positive growth of 0.9 per cent in 2014. The economies of both Cyprus and Greece are expected to continue contracting in 2014.
The report states that tensions in the region have dramatically subsided since the European Central Bank (ECB) announced its Outright Monetary Transactions (OMT) facility. Through the OMT, the ECB can make unlimited purchases of bonds from a government that requests assistance and agrees to certain economic measures.
The relentless increase in unemployment – experienced by most countries in the region following the Great Recession – reached a new historical high of 12.2 per cent in the euro area. However, the unemployment rate varies greatly across the region. In Germany the rate of unemployment is at an historic low of about 5 per cent, while Greece and Spain face extraordinarily high unemployment rates of nearly 27 per cent, with youth unemployment rates more than double that amount.
Moving forward, the unemployment situation is expected to improve at a slow pace, as growth in the region is not strong enough to spur much dynamism in labour markets. In addition, as discouraged workers dropped out of the labour force during the recession, they will re-enter as conditions improve, delaying the improvement of the unemployment rate. In the euro area, the rate of unemployment is estimated to average 12 per cent in 2013 and is expected to stabilize during 2014 with an average rate of 12.1 per cent before finally starting to decline to 11.8 per cent in 2015.
Department of Economic and Social Affairs (DESA) – Social Policy and Development Division - Employment Issue in Social Perspective: http://undesadspd.org/Employment.aspx
International Labour Organization (ILO) – Employment Promotion: http://www.ilo.org/global/topics/employment-promotion/lang--en/index.htm
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