Economic growth has been hampered by deepening tensions in the financial markets, combined with rising unemployment and deleveraging of both the public and private sector, say Chief Economists of the EBF Economic and Monetary Affairs Committee in their end of year outlook on the euro area economy.
Depicting a move away from the picture painted in their mid-term review just a few months ago, their report, dubbed 'Economic Growth is the Cure', surmises that external demand to help maintain economic growth can no longer be relied on due to a number of factors: the slowing down of emerging market economies, excessive public debt burdening the US economy and the unstable global geopolitical environment.
The EMAC Chief Economists expect that inflation will approach the European Central Bank’s medium term target, close to but below 2 per cent in 2013. What is more, the ECB is expected to maintain the refinancing rate of 0.75 per cent stable throughout the forecast period.
Dimitris Malliaropulos, Chair of EMAC, says there is light at the end of the tunnel. “If the European authorities take bolder steps towards a genuine Economic and Monetary Union, with a Single European Supervisor under the proposal for a Banking Union, confidence in EU policy and a positive economic future could help revive the markets.”
He concedes that due to the long-term nature of policies being introduced, the results of EU economic growth policies will only gradually emerge. But he emphasises that the Commission and the national governments will need to develop urgently a “compelling and credible plan to help the euro area economy get back on its feet".
Press release
Economic Growth is the Cure
© EBF
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