* GDP growth seen +0.3 pct through Q3, +0.4 pct in Q4
* Euro zone rates seen steady at 1.0 pct through Q3
* Probability of bailout of Greece at 25 pct
By Ross Finley
LONDON, Feb 9 (Reuters) - The euro zone economy will
probably just bump along in 2010 and there is only a one in four
chance that Greece may have to seek a bailout this year to put
its public finances back on track, a Reuters poll found.
The crisis around Greece's ability to fund its huge deficits
has hammered the euro and could put already tepid growth
forecasts at risk if market worries about financial troubles
spreading to other smaller euro area nations prove justified.
The latest Reuters poll results will fan concerns that the
16-member bloc is falling behind a U.S.-led recovery among rich
nations and a boom in emerging markets after the most punishing
global economic downturn in generations.
The poll of more than 60 economists conducted Feb 4-9
predicted that growth will slow to 0.3 percent in the current
January-March period, the same as an expected 0.3 percent in the
quarter just ended. That matches a poll taken one month ago.
There is a bit more optimism for performance in the second
half, with growth expected to pick up to 0.4 percent in the
fourth quarter. The European Central Bank will likely raise
interest rates by 50 basis points late in the year to end 2010
at 1.50 percent.
High unemployment, at 10 percent in the euro area and
approaching 20 percent in the fourth largest economy, Spain,
will likely restrain the economy in coming months.
"Unemployment will continue to be a drag on growth in the
coming quarters," said Isabelle Job, head of macro research at
Credit Agricole CIB.
There is also a risk that after a fillip from inventory
restocking, restrained consumer spending may make companies
think twice about capital investment, key to jumpstarting a
sustainable expansion in the early stages of recovery.
"In an environment of moderate demand prospects and low
capacity utilisation rates, there is no expectation of any
marked rebound in investment," said Job.
For 2010 as a whole, medians pointed to growth of 1.3
percent, slightly higher than the 1.2 percent predicted a month
ago. But the range of forecasts narrowed to between 0.6 percent
and 2.2 percent compared with 0.2-2.4 percent in January.
ONE IN FOUR CHANCE OF GREEK BAILOUT
The median 25 percent chance that financially-strapped
Greece would need to seek some kind of bailout either from the
European Union or the International Monetary Fund is roughly
similar to other polls Reuters has conducted in recent weeks.
The 10-year Greek/German bund narrowed sharply to 313 basis
points on Tuesday from 351 basis points earlier while credit
default swaps for Greece were quoted at around 416 basis points.
A Reuters survey of top fixed-income strategists at bond
dealers taken a month ago put those chances at one in five,
while the median forecast from a sample of contributors to the
Reuters ECB rates poll put the chances at 30 percent.
A like-for-like analysis of matching contributors from the
ECB poll conducted Jan 25-26 and the latest long-term poll shows
the probability of a bailout has risen.
So far there has been little talk among economists about any
broad economic impact of the Greek fiscal crisis, even if it
were to spill over into Portugal or Spain, a much larger economy
that makes up more than 10 percent of euro area GDP.
The crisis has underscored widening divergences among euro
zone economies already apparent in official growth rates and
business surveys.
But further declines in the euro currency could be
beneficial, boosting euro zone exports from large economies like
Germany as it has made them relatively cheaper.
(Polling by Bangalore Polling Unit; Editing by Susan Fenton)
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