Euro Area outlook remains positive, despite rising concerns about global growth outlook

January 2016 | Economy Watch Reports

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Despite a long list of mainly geopolitical risks and crises, the short-term outlook remains moderately favorable, with GDP nearing pre-crisis (i.e., August 2009) levels at the end of 2015. This is mainly thanks to strong domestic demand, still supported by the drop in oil prices, however the pace of expansion slowed somewhat in recent months. Headline inflation remains below the ECB’s target. Industrial production seems to be picking up, in part benefiting from a weaker euro. Labor markets continue to recover, though the speed differs across countries, with the fastest improvements in Europe’s periphery.