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EC sees Euro area growing

THE Eurozone is coming out of recession thanks to monetary and fiscal stimuli, the European Commission (EC) said yesterday in its interim forecast.<br /><br />But its outlook for the rest of the year remained gloomy as unemployment reached a 10-year high and industrial production disappointed. <br /><br />The EC still expects GDP in the Eurozone to contract by four per cent this year, but said that it would start to expand in the second half of the year.<br /><br />It expects the Eurozone area to expand by 0.2 per cent in the third quarter and 0.1 per cent in the fourth quarter, having contracted 0.1 per cent in the three months to the end of June. <br /><br />But Joaquin Almunia, EC economic and monetary affairs commissioner, said the improvement was &ldquo;mainly due to the unprecedented amounts of money pumped into the economy by central banks and public authorities&rdquo;.<br /><br />He added: &ldquo;We need to continue implementing the recovery measures announced for this year and 2010 and accelerate the repair of the financial sector.&rdquo;<br /><br />&ldquo;We need to define a clear, credible and coordinated exit strategy to put public finances progressively back on a sustainable path.&rdquo;<br /><br />But industrial production in the single currency bloc fell by 0.3 per cent month-on-month in July, although the year-on-year drop in production moderated to 15.9 per cent from a peak of 21.3 per cent in April.<br /><br />The jobless rate in the 16-country area hit a 10-year high of 9.5 per cent in July according to official data released yesterday.<br /><br />The number of unemployed in the Eurozone rose by 167,000 to 3.26m, but the rate of increase has slowed compared to earlier this year.