Economic outlook for the Euro Area

Matthieu Grouès,

C.I.O.

Indicators point to another quarter of small contraction

Uncertainty has been on a rising trend

The recession owes as much to uncertainty than to fiscal tightening

Fiscal retrenchment will remain a drag on growth

The Euro has not been that weak for ten years

This should help exports

Corporate investment never really rebounded

The change in inventories is already very negative

What to expect next year?

The euro area crisis is as much a crisis of budget

balances as of current accounts

Some countries have corrected both imbalances

Some have had more mixed results

The ECB has been very proactive

But there are wide disparities in financial conditions

between countries, hence the last annoucements