The Economist poll of forecasters

Growth prospects in parts of Europe have diminished drastically in the past 12 months. In May 2011 our forecasters reckoned that Spanish and Italian GDP would grow by over 1% in 2012; now they expect both economies to shrink by 1.7%. The outlook for other European countries has worsened too, thanks to worries over contagion, default and the break-up of the single-currency area. While inflation could hurt the likes of Italy, where consumer prices are expected to balloon as energy costs and taxes rise, Switzerland is threatened by deflation. The appreciation of the Swiss franc creates deflationary pressure by driving down the price of imports. And falling prices can discourage consumption and increase real borrowing costs.