Economic Outlook

Euro Area: Uncertainty weighs temporarily on recovery

Authors

  • Jens Boysen-Hogrefe
  • Salomon Fiedler
  • Dominik Groll
  • Stefan Kooths
  • Stefan Reitz
  • Ulrich Stolzenburg
Publication Date

Economic Recovery in the Euro Area has lost momentum in the second half of 2015. Due to dampening effects from the world economy and a marked increase in political uncertainty, a number of sentiment indicators also point downwards. Nevertheless, domestic demand increased rather strongly, while the labor market situation kept improving. Therefore, we consider the minor slowdown of the past months to be temporary. Supportive factors such as low interest rates and a low external value of the currency encounter a slightly expansionary fiscal policy stance over the forecast horizon. As a result, economic activity is expected to gain grip in 2016.

Info

Key Words

  • Euro area
  • European Monetary Union
  • global financial cycle
  • leading indicators
  • Target2
  • Youth unemployment