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Countries that use the euro are headed for a mild recession this year, the European Commission said Thursday, according to a Washington Post article.

This would be the Euroe region’s second economic contraction since 2008, despite years of attempts to solidify the euro zone’s economic standing.

The announcement is more pessimistic than a November estimate that predicted slight growth in 2012. And it comes days after European officials agreed to hand Greece a USD$172 billion bailout, its second in two years.

Countries such as Portugal, Ireland and Spain are also struggling to get their economies back on track, and leaders and economists are questioning whether Europe’s response to the crisis has focused too much on austerity and too little on growth.

Across the full 27-country European Union, the largest single market in the world, growth will be flat this year, the estimate said. The slowdown could reverberate far beyond the continent’s borders, as fewer companies make large purchases and investments and banks stay cautious about lending.

For the 17 countries that share a common currency, the economy will contract by 0.3 percent, the commission forecast.

“Prospects have worsened, and risks to the growth outlook remain,” E.U. Economic and Monetary Affairs Commissioner Olli Rehn told reporters in Brussels on Thursday.

Full report at Washington Post

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