European stocks are moving lower from recent 5 year highs and the euro is losing strength on Tuesday after the European Commission projected lower growth forecasts for the European Union and raised their estimates for the unemployment rate to remain elevated.
The commission cut their GDP forecast for the 17 member euro-area in 2014 to 1.1 percent from an earlier estimate of 1.2 percent while forecasting 1.4 percent growth across the larger 28 member European Union.
The commission also raised their 2014 euro-area unemployment estimate slightly higher to 12.2 percent from its earlier forecast of 12.1 percent and said it won’t lower to 11.8 percent until 2015. The unemployment rate in the European Union for 2014 is expected to lower to 11 percent.
For the remaining months of 2013, the commission expects the 17 member euro-area will face its third year of economic contraction in five years by contracting 0.4 percent while the economy will remain flat in the 28 countries of the European Union.
The unemployment rate in the euro area is forecast to hold steady at 12.2 percent in 2013 and 11.1 percent in the European Union.
After disappointing inflation numbers last week, investors are anticipating that the European Central Bank will cut interest rates during its next meeting on Thursday.