Slow Recovery
The projected recovery of the Euro Area is appallingly slow. Whilst the US is now looking forward to a rapid rebound in 2021, the Euro Area is not expected to recover to 2019 levels of output until the end of 2022.
The projected recovery of the Euro Area is appallingly slow. Whilst the US is now looking forward to a rapid rebound in 2021, the Euro Area is not expected to recover to 2019 levels of output until the end of 2022.
The ECB’s mandate specifies price stability as its objective. It is supposed to keep inflation below 2 percent. Down to the 1990s that would have been a demanding task.
But in recent decades the main problem has been not so much to prevent inflation as to avoid deflation. And that is the ECB’s current concern.
Inflation expectations give a further indication of just how lack luster is the outlook for the Euro Area.
Inflation expectations give a further indication of just how lack luster is the outlook for the Euro Area.
The Euro is rising against the dollar in large part because investors fancy it as a hedge against the revival of inflation in the United States. Slow inflation and a strong euro mean slow growth for Europe.
In Q3 2020, after a rebound from the worst of the corona shock, Italy’s GDP was ten percent below its level in Q1 2008, twelve years ago!
https://twitter.com/RobinBrooksIIF/status/1352999427334660096
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