The Conference Board Economics Watch® - European View
- The European debt crisis and the increased risk of recession are reinforcing each other and threaten to trigger a new banking crisis.
- Global growth, previously forecast for 4.3 percent, may fall below 4 percent in 2011, which will weigh on growth in core Euro Area economies.
- Easing inflation may support consumption and allow the European Central Bank (ECB) some room for policy maneuvering, but there are limits to what central bankers can do at this time.
- At the aggregate level, the Euro Area is self-sufficient. The key challenge for policymakers is to restore the financial flows from surplus countries to deficit countries.
- Structural reforms aimed at boosting employment and productivity are critical to placing debt levels on a more sustainable path in the medium to long term.