The European Commission says the eurozone economy will shrink in 2013, after
previously predicting that it would grow slightly.
Delivering its winter forecast, vice-president Olli Rehn said the 17 economies
in the eurozone would collectively shrink by 0.3% this year.
The Commission had previously predicted overall GDP growth of 0.1%.
But it is also predicting that the eurozone will see 0.7% growth in the fourth
quarter.
The Commission is concerned about a "surprise" fall in Portugal's economy,
which fell 3.2% in 2012 and is forecast to contract by another 1.9% in 2013.
Most economic forecasters have been revising down their European growth
estimates, after the global economic recovery showed signs of faltering in the
final quarter of 2012.
For example, in January the International Monetary Fund (IMF) said it expected
the eurozone to fall into "mild recession" in 2013, having previously predicted
growth.
It also predicted that the UK would grow 1% in 2013, compared with the 1.1%
previously forecast.
The World Bank also revised down its global growth forecasts earlier in
January.
But European Central Bank (ECB) president Mario Draghi believes the eurozone
will begin recovering in the second half of this year.
And this week, Germany's Bundesbank said Europe's biggest economy would avoid
recession and return to growth in the first quarter of 2013, after shrinking
0.6% in the last three months of 2012.
It expects Germany to continue growing throughout 2013.