Europe’s Financial System Moves toward Stability, but the Path to Sustainable Long-Term Growth Remains Unclear
- The commitment of the European Central Bank to purchase sovereign bonds will help preserve the stability of the euro in the short term
- Due to continued weakness in confidence indicators, the contraction in The Conference Board Leading Economic Index® for the Euro Area resumed in September
- The leading indexes in several countries have not provided clear recovery signals and economic contractions continue in the periphery countries, which could cause their weaknesses to spill over to core economies
- The creation of a path for sustainable recovery and growth is now closely connected to political choices
- IMF findings on fiscal multipliers could signal a modest shift toward growth-enhancing policies and away from fiscal consolidation
- Structural adjustments designed to reduce current account imbalances and improve competitiveness in weaker economies are essential for sustainable growth
