EFN Report Spring 2010: Economic Outlook for the Euro Area in 2010 and 2011
The world economy will recover during 2010 and 2011 thanks to ultra-low key interest rates in industrial countries and to the strong growth in emerging markets economies. In the euro area, however, the phasing out of expansive fiscal policies and fiscal consolidation will drag down demand; rising exports will be the main driver of the recovery. Internal demand will have a positive (although small) contribution to growth in 2011. We expect euro area GDP to grow around 1.2% and 1.6% during 2010 and 2011, respectively. Due to rising exports, the industrial sector will resume positive growth in the short run but the intensity of the recovery will be moderate and insufficient to compensate the sharp fall of 2009: at the end of 2011, the industrial production index is expected to be still 10% below its pre-crisis levels.