European Economy. Quarterly report on the euro area 2010.

Abstract

The euro-area recovery remains on track although the renewed market turbulence seen over the past two months shows that uncertainty and downside risks remain high. Recoveries following financial crises tend to be more gradual and more moderate than 'conventional' recoveries as they are held back by weak domestic demand and tight credit conditions. The ongoing recovery will be no exception: According to the Commission's spring forecast, near-term growth prospects remain rather subdued, with the recovery gaining traction only towards the end of this year and into next. Overall, the euro-area economy is projected to grow by just below 1% in 2010 and 1½% in 2011. The recovery path is set to be bumpy, however, with an uneven pace of growth across Member States. This reflects differences in the scale of the adjustment challenge across economies and the policies being pursued