Eurozone's economy set to shrink again this year: EU

The 17-nation bloc's economy, which generates nearly a fifth of global output, will shrink 0.3 percent in 2013, the Commission said, meaning the eurozone will remain in its second recession since 2009 for a year longer than originally foreseen.

The Commission, the EU executive, late last year forecast 0.1-percent growth in the eurozone's economy for 2012, but now says tight lending conditions for companies and households, job cuts and frozen investment have delayed an expected recovery.

The Commission sees the eurozone economy growing 1.4 percent in 2014, with a decline of 0.6 percent for 2012.

“The improved financial market situation contrasts with the absence of credit growth and the weakness of the near-term outlook for economic activity,” said Marco Buti, the commission's director-general for economic and monetary affairs.

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