For Europe’s media economy, 2008 has been a year of dashed hope.

When the year began, many believed Western Europe would be able to avoid the worst effects of a credit mess that was developing in the U.S.

This hope was based on the fact that many European countries follow economic policies that are significantly different from the U.S., and therefore have avoided a huge build-up of consumer debt.

That may be so, but as the year progressed, Western Europe followed the U.S. into the mire anyway.

“There has been the realization that we aren’t going to avoid these problems,” says Jonathan Barnard, head of publications at ZenithOptimedia in London. “But at the moment we do not have quite so deep a problem as in the U.S., partly because some of these markets hadn’t grown so quickly as the U.S., so there was less excess growth to lose."

Barnard recently downgraded his forecasts for ad spending growth in Western Europe. Now he expects the media economy to decline 0.5 percent in 2008 year on year, and to dip 1.0 percent next year. Previously he had forecast growth of 1.6 percent in 2008 and 2.6 percent growth in 2009.

Also expecting a contraction in the ad economy in Europe is Adam Smith, futures director at GroupM, who's forecasting a 0.7 percent dip this year and 1.7 percent next year.

But while next year does look gloomy, Barnard expects things to begin turning around in the third quarter of the year.

Still, recovery will be a patch-quilt affair, and that's so because of the diverse group of countries that make up the European economy, each with its own media and economic conditions.

The hardest-hit countries in Western Europe so far have been the largest countries -- Britain, Spain, France, Germany and Italy, according to ZenithOptimedia -- and of those Spain is hurting the worst, largely because it suffered a massive crash in its housing market that’s not dissimilar from that in the U.S.

Both ZenithOptimedia and GroupM expect a double-digit slump in ad spending growth in Spain this year (10 percent and 14 percent respectively). Next year should be slightly better but still down some 4 to 5 percent, reckon these forecasters.

In Germany, ad spending is forecast to dip 2 percent in 2008 and 5 percent in 2009.

How much more Britain will suffer varies by how much forecasters think the internet will see cutbacks in spending.

ZenithOptimedia believes that online ad spending will only be knocked back marginally and therefore forecasts a drop of 1 percent this year in Britain’s ad economy and a rise of 1 percent next.

But in the UK and elsewhere in Europe print is taking a bashing not unlike what's been seen in the U.S.

“The pressures are the same,” explains Barnard. Newspaper circulations are falling, classifieds are migrating to the internet, and layoffs are common.

However, the situation hasn’t reached quite the depths of the U.S. In part this is because newspapers markets in Western Europe have historically been more competitive than in the U.S., and that's kept ad prices down.

“It also means that when advertisers look at budgets, newspapers aren’t looking so expensive, so are not so necessary to cut,” explains Barnard. He's forecasting about a 4 percent contraction for both newspapers and magazines across Europe next year.

Overall, Central and Eastern European media will fare better next year than their Western European counterparts, seeing only a slight slowdown as multinationals pull back.

Countries that are further ahead on the development path, such as Turkey, Greece and Hungary, are expected to see the pace of the growth slow, while countries including Belarus, Bosnia and Romania, which are still very small markets, are expected to have double-digit growth in the next few years.

This pattern is similar to what is happening in developing markets in Latin America and Asia Pacific.

This means countries including India, Indonesia, Brazil and Costa Rica are all still forecast to achieve double-digit growth.

Meanwhile, in China, which is a little further along the development path, ad spending growth is expected to slow down a bit. ZenithOptimedia forecasts 9 percent growth in 2009; 15 percent in 2010; and 9 percent again in 2011.