May 21

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EU set for economic growth, but Greece to suffer (1) downturn



Would you like to brush up your English for Business and Economics? Expand your vocabulary by reading the article along with the expressions highlighted in oragne and explained right after the text.


The European Commission published optimistic but cautious economic forecasts on Tuesday (5 May), (2) upgrading the bloc’s growth prospects for this year but keeping them unchanged for next year. According to the Spring forecast, the eurozone economy should grow by 1.5% in 2015, instead of the 1.3% (3) projected in the Winter forecast, and 1.9% in 2016. The EU’s overall growth is now (4) predicted to reach 1.8% in 2015, instead of 1.7%, and 2.1% in 2016. “Economic spring is with us. (5) Recovery is sustained by external factors but also by economic policies which are beginning to bear fruits,” finance commissioner Pierre Moscovici said.

Driven by private consumption, the European economy benefits from three “tailwind factors”: the fall in oil prices, a weaker euro and the European Central Bank’s (6) quantitative easing (QE) programme. This (7) bond buying operation had a “stronger than expected” effect on financial markets, “prevented an increase in (8) real interest rates” and “should support lending, confidence, investment and ultimately economic growth,” the commission said. But the tensions with Russia and high unemployment cast a shadow on long-term (9) projections and Moscovici warned that “this spring must not be just a season, we want it to last for long”. “More has to be done: real progress in investment; reforms that are still indispensable and budgetary responsibility. These are things that are absolutely necessary if we want Europe to be on long-term way to growth and job creation, which is the priority of this commission.”

The unemployment rate is expected to decrease from 11.6% in 2014 to 11% in 2015 and 10.5% in 2016 in the eurozone. It is to go from 10.2% to 9.6% and 9.2% in the EU 28. While large member states like Germany, Poland, Spain or the UK will experience growth above the EU average, Italy will return to growth with fragile 0.4% increase of its GDP in 2015 and 1.4% in 2016. Ahead of a general election at the end of this year, Spain will be one of the fastest growing economies in the EU, with 2.8% expected this year and 2.6% in 2016, but it will miss its (10) deficit and debt targets. “Reforms are starting to bear fruits, must efforts need to be sustained,” said Moscovici, adding that “an electoral year should not stop [us] from acting”.

(1) downturn: a general slowdown in economic growth; one of the stages of the economic/business cycle (Please NOTE that several terms are used to describe the stages of the economic cycle, such as downturn, downswing; recession, depression, trough, recovery, upswing, peak, etc. In some cases, these terms are described by a precise definition, in other cases, they are rather used in a broad sense. Depending on what context you are working in, it is advisable to check the definitions of these terms.)
(2) to upgrade: to ameliorate, to raise to a higher level
(3) to project (here): to estimate, to forecast
(4) to predict (here): to estimate, to forecast
(5) recovery: regaining of the former, better economic condition –see also point (1) for further explanation
(6) quantitative easing programme (QE): An unconventional monetary policy tool of central banks that aims at pumping money into the economy, i.e. increasing liquidity on the market while keeping interest rates low. Central banks (including, recently, the European Central Bank) buy assets, usually government bonds in order to increase the amount of cash in the financial system. This, in turn, encourages banks to lend more to companies and individuals, hopefully stimulating the economy, as a whole.
(7) bond buying operation (here): part of the QE programme (see point 6). FYI: Bonds are debt securities, under which companies/individuals loan money to companies or governments. In simpler terms, the issuer of the bond wants to borrow money OR If you hold bonds, you act, basically, as a bank: you loan money to companies or governments.
(8) real interest rate: it is the real rate that the investor receives after adjustment for inflation, i.e. after removing the effects of inflation (in contrast with the nominal interest rate). In simpler terms: nominal interest rate minus inflation
(9) projection (here): forecast
(10) deficit and debt targets (here): this term refers to keeping public deficit (=excess of government spending over revenues) and public debt (=debt owed by the government) under control.


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Image courtesy of Stuart Miles


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Permanent link to this article: https://www.euenglish.hu/2015/05/eu-set-for-economic-growth-but-greece-to-suffer-1-downturn/

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