With interest rates at a record low level, i.e., 0.75 percent, the European Central Bank (ECB) has cut the forecast for 2013 in terms of economic growth amidst continued recession and bleak 2012. Having poor Gross Domestic Product (GDP) growth rate for the year 2012, economists have forecasted the growth rate to be negative for the coming year, i.e., 2013. Mario Draghi, president of ECB, believes Euro zone economy to shrink in 2013 as well. Despite economic shrink during first half of the year, the economy is expected to revive amid execution of accommodative monetary policy and improve in financial market with increase in market confidence.

The looming uncertainties about the resolution of sovereign debt and governance issues in Euro area has been the major constraint for optimistic economic outlook. Where at one side the single currency zone is struggling itself to revive from ongoing financial turmoil, fears of fiscal cliff from U.S. economy is also actually affecting the market sentiments in Euro area, adding ignition to the plunging economy.

Despite support from ECB and commitments from International Monetary Fund (IMF) to do whatever it takes to prevent Euro zone from economic downturn, the economy has not been doing well, instead plunging into deep recession with no signs of recovering soon. With different interest rates being offered in different parts of Euro zone, ECB is actually struggling to control the interest rate regime in the financial system and stabilize the economy.

Having one of the largest GDP in world economies, current recession in single currency zone is not only affecting its own economy, but on the other end, dragging other major economies along with itself as well. With major market share in service and manufacturing sector, especially in financial services, hospitality and automobile sector, the downfall of Euro economy is not only affecting global economy but actually spreading a multiplier-recession effect to the entire world economy.

Until and unless the policy makers, regulators and government come up with financial reforms to survive and eventually grow the economy, it will indeed, be a very challenging situation for the entire global economy and market players to realize optimistic economic outlook.