EFN Report Spring 2013: Economic Outlook for the Euro Area in 2013 and 2014
In 2013, the expansion of the world economy will be a bit stronger than in 2012. Growth in Asia should be more dynamic than in 2012, and the US economy appears to robustly withstand the restrictive and unstable US fiscal policy, thanks to a very expansionary monetary policy. In spring 2013, the euro crisis is clearly less acute than in 2012. Overall, we forecast euro area GDP to be -0.3 percent lower in 2013 than in 2012, a downward revision from the positive growth of 0.2% we expected in our last report. The situation should improve in 2014, with an expected GDP growth of about 1.3%. However, this will not be sufficient to lower the unemployment rate, which actually could further increase to about 12.6%. Our inflation expectations for 2013 have moderated to a y-o-y rate of 1.6%, and they remain subdued also in 2014, at about 1.4%. The likelihood for the ECB to cut interest rates has moderately increased.