(BRUSSELS) - EU Economics chief Joaquin Almunia warned on Tuesday that soon-to-be published growth forecasts would paint a dismal picture of the European economy.

After the eurozone economy contracted 0.2 percent in the second quarter, Almunia noted that ECB and OECD forecasts for the rest of 2008 and early 2009 "are not very good,"

"Tomorrow (Wednesday) I will present our updated forecasts for this year and unfortunately I don't expect to convey a different message," he said in a prepared speech delivered in Frankfurt and distributed by his office in Brussels.

"Overall, the situation is unusually uncertain. Yet we can be in little doubt that the resilience of our economy is set to be tested," Almunia said.

The Organisation for Economic Cooperation and Development recently cut its eurozone growth forecast for this year to 1.3 percent from 1.7 percent and the European Central Bank has reduced its estimate to 1.4 percent from 1.8 percent.

"Confidence has been plummeting, and there is a possibility that the deteriorating economic environment could feedback negatively on the financial sector, prolonging the difficulties experienced so far," Almunia said.

"While the labour market has held up well until now, the situation could change," he added.

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