|Economic growth is weak, reflecting subdued activity in euro area trading partners and reduced demand growth in emerging economies. GDP growth is projected to strengthen gradually in 2015 and 2016, as a robust labour market and continued very expansionary monetary policy boost private consumption and residential investment. The unemployment rate is projected to remain low and consumer price inflation to rise somewhat.
The fiscal stance is expansionary, which is appropriate. Growth-enhancing spending should be raised further, including for childcare facilities, more support for youth with disadvantaged socioeconomic background in the education system and infrastructure investment. This would boost growth in the short run, and – by increasing imports – provide positive spillovers for the euro area. Overdue structural reforms to deregulate the service sector are needed to strengthen potential growth.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.