The Conference Board Economics Watch<sup>Â®</sup> - European View

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The Conference Board Economics Watch^Â® - European View

Authors:
Jean-Claude Manini
Bert Colijn
Publication Date:
October 13, 2011

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.