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Euro
Area, the Recovery will Start in the First Half of 2003
FALL REPORT 2002 |
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The Second Edition of the
EFN Report analyses the current situation of the Euro area Economy, providing
a forecast for the second half of 2002 and 2003. Moreover a number of policy
issues are discussed, such as the dating of business cycle turning points,
the convergence process in labour markets following the adoption of the
single currency and the effectiveness of fiscal policy in stimulating growth.
The final chapter is devoted to the analysis of the US external deficit,
addressing the issues of its sustainability and the consequences to Europe
of a crisis leading to a sharp fall in the value of the US Dollar.
The results provided derive by the utilisation of several statistical and
econometric tools developed and employed by the various institutes composing
the Network. However, the results are presented in a non-technical way and
the policy implications are clearly exposed.
Euro zone GDP is forecasted to grow 0.9% this year and 2.2% in 2003. In
2002 growth will be driven almost exclusively by net exports, while next
year domestic demand will eventually kick in. However, this would not contribute
at all to reducing unemployment, which is bound to increase slightly to
8.6% next year.
The still high low degree of capacity utilisation will not contribute to
inflationary pressures. However external factors could push inflation to
2.5% by December Price increase would be around 2% in 2003. |
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