CURRENT ECONOMIC INDICATORS AND GROWTH PROSPECTS FOR THE EURO AREA (EU)

Abstract

According to IMF (April, 2017), the modest recovery in euro area 2017- 2018 is projected to be supported by a mildly expansionary fiscal stance, accommodative financial conditions, a weaker euro, and beneficial spillovers from a likely U.S. fiscal stimulus. The medium-term outlook for the euro area as a whole remains dim, as projected potential growth is held back by weak productivity, adverse demographics, and, in some countries, unresolved legacy problems of public and private debt overhang, with a high level of nonperforming loans (the expected average growth of GDP for the period 2017-22 was only 1.6%). IMF predicts a slight increase in the rate of investment in the period 2017-2022 (at around 21%), moderate increase in the volume of export and import (average 4%), while the unemployment rate (on the level of the Euro zone) will decrease slightly (and achieve 8.1% at the end of the projection of the period).

Inflation in the euro zone has surged in early 2017, reaching a four-year high of 2% in February, just above the target set by the ECB. ECB will continue to pursue an exceptionally accommodative monetary policy, with major policy interest rates at or below zero.

Growth in Germany, a major market of euro area market, will remain steady, averaging 1.5% in 2017-21. Nonetheless, a shift in the German economy towards greater investment and private consumption will provide a boost to CEE.