By Jan Strupczewski
BRUSSELS, Jan 16 (Reuters) - Euro zone finance ministers on Monday will review steps taken to support the malfunctioning banking sector and the real economy as the European Commission is to present grim new forecasts of a slide into recession.
European leaders endorsed last month a plan to boost the economy of the 27-nation bloc with a 200 billion euro package, the bulk of which is to come from national budgets and be spent in 2009 to prop up waning private demand and investment.
This comes on top of a 2.2 trillion euro rescue plan for EU banks to help them unfreeze credit for the economy, which the Commission's forecasts will show will shrink this year for the first time in the single currency area of now 16 countries.
"The Commission will present its forecasts, in which it has tried to take into account the effects on the real economy of the stabilisation packages already announced," a source close to the preparation of the meeting, called the Eurogroup, said.
"So there will be a discussion -- is it enough, should more be done, and if so -- when? and how much? What is the time lag with which one can hope to influence the real economy? When will the effects kick in?" the source said.
"We have so far talked very little about the substance of these measures and a lot about what magic number should be announced," the source said.
Commission President Jose Manuel Barroso said on Jan. 5 that Europe should not rule out raising the size of the stimulus package, but EU diplomats have said that very little of the already announced plans had actually been implemented.
It would be reasonable therefore to see more implementation before augmenting the stimulus, they said.
Germany, the euro zone's biggest economy, has nevertheless announced a new 50 billion euro stimulus package on top of a previously launched 31 billion scheme to help it cope with what could be its worst recession since World War Two.
The package, spread over two years, includes new spending on infrastructure and schools as well as tax reforms and consumer incentives to strengthen Germany's struggling auto sector and the measures are likely to be discussed at the Eurogroup.
The European Union's executive arm forecast on Nov 3 that the euro zone economy would still grow 0.1 pecent in 2009 and 0.9 percent in 2010, but data since then has shown the forecasts were too optimistic and they will be revised on Monday.
"It will be safe to assume that there will be a negative sign on growth," the source said. "I am sure the figure will not be far from market consensus."
According to a December poll carried out by Reuters, economists expect a 0.8 percent economic contraction in the euro zone in 2009. (Reporting by Jan Strupczewski, editing by Stephen Nisbet)