(RFE/RL) -- The European Union has issued new economic predictions which indicate that the economies of member states will shrink at a much faster rate this year than previously estimated.
The global recession will hit hard at exports, and unemployment will rise sharply. No relief is expected until late next year, when the situation might stabilize.
The latest predictions look alarming when compared to the estimates issued by the European Commission only four months ago.
The commission now says that the total economic output of both the 27-nation EU as a whole and the 16-nation eurozone will shrink by over 4 percent -- more than double its January estimates, when it forecast a 1.8 percent contraction for the EU as a whole, and a 1.9 percent decline for the eurozone area.
As a result, some 8.5 million jobs will disappear in the EU in 2009 and 2010.
Economic and Monetary Affairs Commissioner Joaquin Almunia told reporters in Brussels on May 4 that unemployment is expected to increase to almost 11 percent in the 27 EU countries and 11.5 percent in the eurozone area in 2010.
Almunia spoke about the gravity of the challenge facing the European economies.
"The intensification of the financial crisis and sharp contraction in world trade drove our economies in Europe into the deepest and most widespread recession since World War II," he said.
The EU said manufacturing and exports are suffering badly, with eurozone exports forecast to drop by a massive 13 percent this year, as world demand dries up.
The European Commission expects what it calls a "subdued recovery" next year, but for that to happen the banking sector must start to recover.
To this end, European governments must move quickly to neutralize banks' bad debts and recapitalize them as needed.