Commissioner Joaquin Almunia predicts recovery from late 2009

The eurozone economy will shrink 1.9% in 2009 and grow by only 0.4% in 2010, the European Commission has forecast.

The Commission said in a statement that the whole European Union was facing a "deep and protracted recession".

Unemployment in the the 16 countries using the euro is expected to exceed 10% in 2010, up from 7.5% in 2008.

The commission hopes it will be possible "to create the conditions for a gradual recovery in the second part of 2009" in the eurozone economy.

Economy Commissioner Joaquin Almunia said in a statement it would be achieved through "measures to stabilise the financial markets, the easing of monetary policy and the economic recovery plans".

The commission said annual inflation in the 16 countries using the euro would be 1% in 2009 and 1.8% a year later.

'Continued fall'

As events unfolded late last autumn, it became increasingly clear that the EU would not be spared a deep and protracted recession

European Commission statement

According to official figures, the eurozone has been in recession since September of last year.

"As events unfolded late last autumn, it became increasingly clear that the EU would not be spared a deep and protracted recession," the commission said.

It added that "the outlook is for a continued fall in GDP throughout the first half of this year".

Different vews

Analysts gave different opinions on the commission's latest forecast.

Sunil Kapadia at UBS Bank said: "On the growth figures for 2009, it's a pretty fair assessment".

However, Gilles Moec at Bank of America said it was more pessimistic than the Commission, forecasting a contraction of 2.6% in 2009.

Last week, Germany became the latest country to unveil an economic stimulus package worth about 50bn euros ($67bn; £45bn) to kick-start Europe's largest economy.

Eurozone's key interest rate is now at 2%, its lowest level since December 2005.



