EFN Report Autumn 2011: Economic Outlook for the Euro Area in 2011 and 2012
High growth dynamics and demand coming from emerging markets will slow only modestly in the rest of 2011 and in 2012, but the intensification of the financial turmoil and the doubts about the ability of the European Union to contain the consequences of possible defaults will hamper world economic growth considerably in our forecasting horizon. For the euro area, we expect GDP to grow by around 1.6% in 2011 and 0.8% in 2012, not enough to bring the unemployment rate back below 10% and substantially less for 2012 than in our Summer report. Many private households and firms will adopt a wait-and-see attitude while, to restore confidence in the euro area sovereign debt, fiscal policy will become even more restrictive.
