{ "title": "Europe’s Economic Outlook", "publication": "IMF Blog, April 11, 2014", "sourceUrl": "https://www.imf.org/en/blogs/articles/2014/04/11/europes-economic-outlook", "canonical": "https://www.imf.org/en/blogs/articles/2014/04/11/europes-economic-outlook", "overlayPath": "/en/blogs/articles/2014/04/11/europes-economic-outlook/index.md", "summary": "Economic growth across Europe is slowly picking up.", "sections": [ { "heading": "Economic growth", "content": "- Economic growth across Europe is slowly picking up.\n- The recovery is still modest; measures to boost economic growth and create jobs are important." }, { "heading": "Western Europe: picking up the pace", "content": "- The recovery projected last October for the euro area has solidified.\n- Revised forecasts: the 2014 forecast for the euro area is up from 1 percent last October to 1.2 percent now.\n- Important upgrades in countries like Spain.\n- Revisions reflect:\n - stronger data flow on the back of past policy actions,\n - the revival of investor confidence,\n - the waning drag from fiscal consolidation.\n- Positive impact on program countries: improving economies, lower spreads, and evidence of market access.\n- UK growth: almost 3 percent is expected for 2014.\n- Remaining headwinds in the euro area:\n - debt overhangs in firms and households,\n - fragmented financial markets,\n - policy uncertainty.\n- Banking Union steps highlighted as important:\n - the single supervisor,\n - the asset quality review,\n - stress tests — important to ensuring the adequacy of bank capital and market confidence.\n- Concern about “lowflation”: a large and persistent undershoot relative to the ECB’s medium-term inflation target of 2 percent.\n - Persistently low inflation puts pressure on debtors, real lending rates, relative price adjustment and jobs.\n - The ECB is paying attention and is considering further action, including unconventional policies within its mandate.\n- Structural reforms emphasized for reviving longer-term growth after several years of under-investment and unemployment.\n - Referenced book: Jobs and Growth: Supporting the European Recovery.\n - Three medium-term priorities from the book:\n - reducing high levels of public and private debt;\n - implementing product and labor market reforms;\n - taking advantage of new growth opportunities through innovation and further integration into global supply chains." }, { "heading": "Emerging Europe: strengthening policies", "content": "- Growth in most of Central, Eastern and Southeastern Europe is recovering in the wake of euro area recovery.\n- Region-wide growth will be held back — marked down since last October — by:\n - the expected contraction in Ukraine,\n - slowdowns in Russia and Turkey.\n- External funding conditions have become more challenging.\n - Capital flows into the region had started to reverse, with portfolio flows turning negative in late 2013.\n - This comes on top of ongoing bank deleveraging the region has faced.\n- Near-term effect: these forces will offset—perhaps even more than offset—the tailwind from Euro Area recovery.\n- Countries with stronger policy frameworks and fundamentals have been less hurt by the reversal in capital flows.\n- Policy guidance:\n - those with exchange rate and monetary policy flexibility should continue to use it as the first line of defense against volatility;\n - all countries, especially those with weaker fundamentals, need to address legacy issues and problems exposed by the crisis:\n - structural weaknesses that hold back growth and keep unemployment high;\n - non-performing loans that hamstring credit;\n - exhausted fiscal buffers." }, { "heading": "Ukraine", "content": "- Ukraine faces a confluence of a geo-political crisis and an economic one.\n- Authorities are taking unprecedented action to tackle immediate and chronic problems, including actions to:\n - ensure exchange rate flexibility and competitiveness;\n - stabilize the financial system and confidence in banks;\n - gradually reduce the fiscal deficit;\n - adjust energy prices from far-below-world levels (with safeguards for the poor);\n - implement wider reforms to tackle corruption, governance and the business climate.\n- Remaining tasks: finalize some actions and ensure that the program is financed.\n- If all goes well, expectation is that the IMF Board will consider the program in late April/early May.\n\nSource: Europe’s Economic Outlook — Reza Moghadam, April 11, 2014.\n\n---\n\n\n References\n\n- lowflation\n- Jobs and Growth: Supporting the European Recovery\n- webcast\n\nSource: https://www.imf.org/en/blogs/articles/2014/04/11/europes-economic-outlook" } ], "bullets": [ "[Markdown version](/en/blogs/articles/2014/04/11/europes-economic-outlook/index.md)", "[Structured JSON version](/en/blogs/articles/2014/04/11/europes-economic-outlook/index.json)", "[Bundle manifest](/en/blogs/articles/2014/04/11/europes-economic-outlook/bundle-manifest.json)", "Authors: Reza Moghadam", "Published: April 11, 2014", "Economic growth across Europe is slowly picking up.", "The recovery is still modest; measures to boost economic growth and create jobs are important.", "The recovery projected last October for the euro area has solidified.", "Revised forecasts: the 2014 forecast for the euro area is up from 1 percent last October to 1.2 percent now.", "Important upgrades in countries like Spain.", "Revisions reflect:", "Positive impact on program countries: improving economies, lower spreads, and evidence of market access.", "UK growth: almost 3 percent is expected for 2014.", "Remaining headwinds in the euro area:", "Banking Union steps highlighted as important:", "Concern about “lowflation”: a large and persistent undershoot relative to the ECB’s medium-term inflation target of 2 percent.", "Structural reforms emphasized for reviving longer-term growth after several years of under-investment and unemployment.", "Growth in most of Central, Eastern and Southeastern Europe is recovering in the wake of euro area recovery.", "Region-wide growth will be held back — marked down since last October — by:", "External funding conditions have become more challenging.", "Near-term effect: these forces will offset—perhaps even more than offset—the tailwind from Euro Area recovery.", "Countries with stronger policy frameworks and fundamentals have been less hurt by the reversal in capital flows.", "Policy guidance:", "Ukraine faces a confluence of a geo-political crisis and an economic one.", "Authorities are taking unprecedented action to tackle immediate and chronic problems, including actions to:", "Remaining tasks: finalize some actions and ensure that the program is financed.", "If all goes well, expectation is that the IMF Board will consider the program in late April/early May.", "[lowflation](http://blogs.imf.org/2014/03/04/euro-area-deflation-versus-lowflation/)", "[Jobs and Growth: Supporting the European Recovery](http://www.imf.org/external/np/seminars/eng/2014/EURbook/index.htm)", "[webcast](http://www.imf.org/external/mmedia/view.aspx?vid=3457465978001)" ], "alternates": { "markdown": "/en/blogs/articles/2014/04/11/europes-economic-outlook/index.md", "json": "/en/blogs/articles/2014/04/11/europes-economic-outlook/index.json", "bundleManifest": "/en/blogs/articles/2014/04/11/europes-economic-outlook/bundle-manifest.json" }, "generatedAtUtc": "2026-08-28T02:22:30.027Z" }