Today sees the launch of the EUROFRAME Group’s latest report giving GDP and inflation projections for the Euro Area to 2014. The report also contains projections of key economic variables for the major EU countries. It analyses the economic effects on the Euro Area of the continuing financial uncertainty and the tight fiscal policy currently pursued.
Among the findings contained in the report are the following:
- As a result of relatively weak external demand, continuing financial uncertainty and the contractionary stance of fiscal policy, output fell in the Euro Area in 2012 (-0.5 per cent). Over the course of 2012 there was a slowdown in some key economies, which were previously contributing much of the growth. This slowdown has carryover effects into 2013.
- Even though we anticipate a recovery in confidence in some major economies over the course of this year, the outcome for the Euro Area as a whole is still likely to be a further limited fall in GDP in 2013 of 0.3 per cent. Weak external demand will not be enough to compensate for the fall in domestic demand.
- For 2014, a recovery in domestic demand should see a return to significant growth in GDP of around 1.3 per cent. However, this forecast must be considered in the light of the continuing vulnerability to financial shocks of a number of the Euro Area member states.
- This vulnerability of countries in financial distress is being addressed through a continuing major fiscal adjustment. However, the fiscal adjustment under way across other members of the Area is also having a substantial negative effect on growth, particularly in the crisis countries. Without this fiscal adjustment the Euro Area would be looking to growth this year at around 1½ per cent and next year at approximately 2 per cent.
The EUROFRAME Group comprises ten of the most respected economic forecasting and research institutes in Europe: CASE (Poland), CPB (Netherlands), DIW Berlin (Germany), ESRI (Ireland), ETLA (Finland), The Kiel Institute for the World Economy (Germany), NIESR (United Kingdom), OFCE (France), PROMETEIA (Italy) and WIFO (Austria).
For further information please contact:
Paavo Suni, ETLA, tel. +358 9 609 90205, mob. +358 50 524 5616, paavo.suni@etla.fi
Web site: www.euroframe.org
