LONDON: Deeper recessions, spiralling unemployment and a failure to meet budget deficit targets will afflict the euro zone's most vulnerable economies floundering under austerity, a Reuters poll suggested on Thursday.
The survey of more than 40 economists, taken over the last week, showed Portugal, Spain and Greece will stay stuck in a much deeper economic mire than they predicted in January.
Having largely supported the euro zone's drive to repair government budgets since the Great Recession, market economists are now questioning the wisdom of austerity - at least in the severe form prescribed by Europe's governing institutions.
Economists have been slashing growth forecasts for the euro zone periphery since last June, while piling on per centage points to their forecasts for unemployment.
The latest poll showed the euro zone's fourth largest economy, Spain, will fail to meet its newly-softened budget deficit targets this year and next by a significant margin. And it will make no progress in reducing depression-era levels of joblessness.
"The extent of the austerity that's being delivered is going to have an impact on the domestic economy, and we're not wildly optimistic about elsewhere in the world," said Janet Henry, chief European economist at HSBC.
Ireland was the only economy out of the four polled on that analysts thought would expand this year and next, albeit at a weaker pace than foreseen in January's poll.
"The only hope for growth in these countries is some kind of export-led growth.
It's too soon for the structural reforms to have a positive impact," said Henry.
With the world economy showing fairly mediocre signs of growth this year, hopes for a big pickup in external demand look distant. Economists were particularly pessimistic about Spain's prospects.
Madrid relaxed its deficit targets for this year and next to grudging acceptance from the European Union, but economists were doubtful that even these softer goals are realistic.
From 8.5 per cent in 2011, Spain's budget deficit will ease to 5.8 per cent of gross domestic product this year, compared with the government's new target of 5.3 per cent, the poll showed.
Worse still, economists thought the deficit would then narrow only slightly to 4.5 per cent in 2013 - miles off Madrid's stated aim of 3.0 per cent.
The findings are in line with the International Monetary Fund's report last week that said Spain's targets are unrealistic.
Madrid has said repeatedly it will meet its tough deficit targets, although fears about the indebtedness of its banks and consumers have sent the state's borrowing costs sharply higher since the start of March.
indiatimes.com
The survey of more than 40 economists, taken over the last week, showed Portugal, Spain and Greece will stay stuck in a much deeper economic mire than they predicted in January.
Having largely supported the euro zone's drive to repair government budgets since the Great Recession, market economists are now questioning the wisdom of austerity - at least in the severe form prescribed by Europe's governing institutions.
Economists have been slashing growth forecasts for the euro zone periphery since last June, while piling on per centage points to their forecasts for unemployment.
The latest poll showed the euro zone's fourth largest economy, Spain, will fail to meet its newly-softened budget deficit targets this year and next by a significant margin. And it will make no progress in reducing depression-era levels of joblessness.
"The extent of the austerity that's being delivered is going to have an impact on the domestic economy, and we're not wildly optimistic about elsewhere in the world," said Janet Henry, chief European economist at HSBC.
Ireland was the only economy out of the four polled on that analysts thought would expand this year and next, albeit at a weaker pace than foreseen in January's poll.
"The only hope for growth in these countries is some kind of export-led growth.
It's too soon for the structural reforms to have a positive impact," said Henry.
With the world economy showing fairly mediocre signs of growth this year, hopes for a big pickup in external demand look distant. Economists were particularly pessimistic about Spain's prospects.
Madrid relaxed its deficit targets for this year and next to grudging acceptance from the European Union, but economists were doubtful that even these softer goals are realistic.
From 8.5 per cent in 2011, Spain's budget deficit will ease to 5.8 per cent of gross domestic product this year, compared with the government's new target of 5.3 per cent, the poll showed.
Worse still, economists thought the deficit would then narrow only slightly to 4.5 per cent in 2013 - miles off Madrid's stated aim of 3.0 per cent.
The findings are in line with the International Monetary Fund's report last week that said Spain's targets are unrealistic.
Madrid has said repeatedly it will meet its tough deficit targets, although fears about the indebtedness of its banks and consumers have sent the state's borrowing costs sharply higher since the start of March.
indiatimes.com
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