Memo: Preparation of Eurogroup and Economic and Finance Ministers Council, Brussels, 9 and 10 March 2009

Ministers will assess the economic situation and outlook in the euro area, in light of recent economic and financial developments. Data released since the cut-off date for the Commission's January interim forecast shows that the down side risks to economic activity have increased. Globally, world trade and industrial production deteriorated sharply by end-2008. Exchange rate markets have shown much volatility and the overall situation in financial markets remains fragile. Within the euro area, hard data have continued to send worrying signals, while recent survey indicators deteriorated further after some signs of a stabilisation at the beginning of the year. Euro-area inflation marked a pause in its downward trend in February, but is likely to ease further in the coming months on account of weakening economic activity and large energy-related base effects.

The March 2009 macroeconomic projections of the European Central Bank place the euro area annual real GDP growth in a range of -3.2% to -2.2% in 2009, and between -0.7% and +0.7% in 2010. This represents a downward revision of the December ECB staff projections and also compare with the Commission's own forecasts of 19 January of -1.9% in 2009 and +0.4% in 2010.