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The onset of recession amid tumbling inflation and continued financial market turmoil is posing considerable challenges for macroeconomic policy and ECB financial market operations.
The economic downturn and the financial turmoil are intensifying fiscal pressures. In the longer-term, progress towards fiscal sustainability and improving the quality of the public finances remain priorities.
Financial innovation and market integration have deepened linkages between euro area markets and institutions, possibly affecting the speed and channels of area-wide monetary policy transmission.
14-January-2009
English, , 418kb
After a sustained period of good macroeconomic performance, new challenges have emerged for the euro area economy. Output growth moderated through 2007 and continued to lose momentum through 2008, with GDP declining in both the second and third quarters of the year. The slowdown has been compounded by the international financial market turmoil that began in August 2007 and intensified in September 2008. World economic activity has
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English, , 304kb
The EU economy is enjoying a strong cyclical rebound. Employment has risen, and the decline in the EU’s sustainable growth rate seems to have halted. Reforms are paying off, especially in the countries that started early. But there is a sizeable gap in GDP per capita compared with the OECD’s best performers, and the gap has widened over the past decade. Moreover, growth and employment performance differs considerably within the EU
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