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The EUREN summer forecast 2011/12 : Temporary slowdown in global growth

- N.4/2011 - juillet 2011

19/07/2011

Euren institutes expect GDP growth in the Euro area to reach 1.8% this year and 1.6% in 2012. This will be enough to trigger a moderate decline in unemployment. However, these figures are disappointing after the deep recession of 2009.The outlook raises several questions for the future.

Euro area: GDP-Growth and its components

According to the latest figures published by Eurostat, GDP growth in the Euro area accelerated significantly during the first quarter to 0.8% (qoq) compared to 0.3% in the previous quarter.

Interestingly, despite of all consolidation plans implemented by member countries, public consumption showed a quarter on quarter growth of 0.8%, the highest value since the fourth quarter of 2008. Meanwhile, household consumption kept its rate of expansion very similar to that reported in previous quarters.

The recovery in the Euro zone is projected to continue throughout the remainder of 2011 and during 2012. But against the background of the fiscal consolidation measures and the less expansionary monetary policy it can be expected to be mild. Divergences in growth dynamics between core and peripheral countries are expected to be maintained over the forecast horizon.

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