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Quarterly Report on the Euro Area

European Commission, (2016), “Quarterly Report on the Euro Area”, Vol.15, No.2, Institutional Paper 030, July

According to the European Commission’s latest forecast, published in May 2016, the economic recovery in the euro area is expected to continue at a fairly modest pace, especially when compared with precrisis standards. Underwhelming growth is mainly supported by internal demand and some tailwinds, in particular very accommodative monetary policies, supportive fiscal policies, low oil prices and a depreciating euro currency. However, the downside risks to the outlook are considerable. On the external side, weaker growth in emerging market economies and/or stronger geopolitical tensions could affect euro area economies more negatively than expected. On the domestic side, the probably most important policy risk surrounding our forecast has materialised, namely the UK’s vote to leave the EU. Its prospective impact on the economic outlook needs to be carefully assessed.


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