The eurozone economy is expected to stagnate in 2013, after shrinking by 0.4% this year. And the broader European Union is expected to see a contraction of 0.3% this year.
Rising unemployment, higher taxes and reduced government spending will offset the positive effect of a gradual recovery in net exports from the 17 eurozone nations, the European Commission said in its latest economic forecasts.
"Given the weak starting point, GDP in 2013 as a whole is projected to grow by only 0.5% in the EU and to remain broadly stable in the euro area," it said, projecting eurozone GDP growth of just 0.1% next year.
The International Monetary Fund last month forecast eurozone growth of 0.2% in 2013.
