Europe's economic recovery, which began in the second quarter of 2013, is
expected to continue spreading across countries and gaining strength while at
the same time becoming more balanced across growth drivers. As it is typical
following deep financial crises, however, the recovery remains fragile.
Nevertheless, recent positive economic news means that the forecasts for
GDP growth this year and next have been raised slightly since the autumn.
EU GDP, which rose 0.1% in 2013, is now expected to rise 1.5% this year
and 2.0% next year, while growth in the euro area, which was -0.4% for 2013
as a whole, is expected to be 1.2% in 2014 and 1.8% in 2015. After two years
of contraction, domestic demand is gently firming, as the crisis' legacy of
excessive debt, financial fragmentation, economic uncertainty and the need
for adjustment and fiscal consolidation fades, and confidence is improving.
The fiscal stances of the EU and euro area this year are expected to be
broadly neutral. At the same time, rising import demand means that external
trade's contribution to growth will become more muted. In line with these
developments, unemployment should fall slightly from its peak, as the labour
market turns the corner. The forecast for inflation in the EU and the euro area
Europe's economic recovery, which began in the second quarter of 2013, is
expected to continue spreading across countries and gaining strength while at
the same time becoming more balanced across growth drivers. As it is typical
following deep financial crises, however, the recovery remains fragile.
Nevertheless, recent positive economic news means that the forecasts for
GDP growth this year and next have been raised slightly since the autumn.
EU GDP, which rose 0.1% in 2013, is now expected to rise 1.5% this year
and 2.0% next year, while growth in the euro area, which was -0.4% for 2013
as a whole, is expected to be 1.2% in 2014 and 1.8% in 2015. After two years
of contraction, domestic demand is gently firming, as the crisis' legacy of
excessive debt, financial fragmentation, economic uncertainty and the need
for adjustment and fiscal consolidation fades, and confidence is improving.
The fiscal stances of the EU and euro area this year are expected to be
broadly neutral. At the same time, rising import demand means that external
trade's contribution to growth will become more muted. In line with these
developments, unemployment should fall slightly from its peak, as the labour
market turns the corner. The forecast for inflation in the EU and the euro area
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