Eurozone economy to shrink in 2013

The Eurozone economy is widely expected to shrink for a second year in 2013 due to higher unemployment and the fact that governments, consumers and companies curb their spending, the European Commission said on Friday. The 17-nation Eurozone's gross domestic product is likely to contract by 0.3% this year, down from November's prediction of a 0.1% growth. In the meantime, the unemployment rate will increase to 12.2%, up from the previous projection of 11.8% and 11.4% last year, the report showed. However, the outlook for 2014 is more optimistic, with 2014 forecasts of a 1.4% expansion and 12.1% unemployment in the region.

Also Friday, the Ifo Institute for Economic Research said a gauge of business optimism rose sharply this month, adding to the evidence that the Europe's largest economy will avoid a recession. The Ifo index released Friday surged to 107.4, up from 104.3 in January, posting the fourth monthly increase in a row. German economy contracted by 0.6% in the last quarter of 2012, and another fall would meet the common definition of a recession as two quarters of shrinking economic output.