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Euro Area: Uncertainty weighs temporarily on recovery

Jens Boysen-Hogrefe (), Salomon Fiedler, Dominik Groll (), Stefan Kooths, Stefan Reitz () and Ulrich Stolzenburg

No 16, Kiel Institute Economic Outlook from Kiel Institute for the World Economy (IfW)

Abstract: Economic Recovery in the Euro Area has lost momentum in the second half of 2015. Due to dampening effects from the world economy and a marked increase in political uncertainty, a number of sentiment indicators also point downwards. Nevertheless, domestic demand increased rather strongly, while the labor market situation kept improving. Therefore, we consider the minor slowdown of the past months to be temporary. Supportive factors such as low interest rates and a low external value of the currency encounter a slightly expansionary fiscal policy stance over the forecast horizon. As a result, economic activity is expected to gain grip in 2016.

Keywords: Euro area; European Monetary Union; leading indicators; Youth unemployment; Target2; global financial cycle; Related Topics; Business Cycle; Business Cycle Euro Area; European Union & Euro (search for similar items in EconPapers)
Date: 2016
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