European Economy. Annual report on the euro area 2002.

Abstract

Directorate General for Economic and Financial Affairs- 3 -EditorialOver the summer, growth prospects for theeuro-area economy have begun to look lessrosy, as a result of both external and domesticfactors. The recovery that started in the firstquarter of 2002 has failed to gather momentum.On the positive side, household consumptiontook over from exports as the engine of growthin the second quarter.Recent data suggest that recovery will continue- albeit more weakly and more gradually thanforecast in the spring - and will accelerate topotential growth only in 2003. The averageeuro-area growth rate of 1.4% for this year,which the Commission put forward in its springforecasts, is now out of reach. Based on ourindicator model, which still predicts someacceleration in the second half of this year, theaverage growth rate for 2002 is unlikely toexceed 1%