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Overview of the EU Economy in 2016. Summary from Economist February 18, 2016.

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Presentation on theme: "Overview of the EU Economy in 2016. Summary from Economist February 18, 2016."— Presentation transcript:

1 Overview of the EU Economy in 2016

2 Summary from Economist February 18, 2016

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4 How is the Eurozone Doing on Growth, Jobs, and Inflation ?

5 Eurozone continuing to struggle to escape recession threat. Growth remains steady, but a low 1.2% at best Growth 0.3% QoQ for 2015 Q4

6 Average or Natural Growth is about 1.5% for the Euro Area Euro Area needs stronger growth of say 1.5% - 2.0% to resolutely reduce unemployment.

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9 Source: IMF WEO October 2015 Forecasts of GDP in 2016

10 IMF Update to World Economic Outlook – January 2016 In advanced economies, where inflation rates are still well below central banks’ targets, accommodative monetary policy remains essential. Where conditions allow, near-term fiscal policy should be more supportive of the recovery, especially through investments that would augment future productive capital. Fiscal consolidation, where warranted by fiscal imbalances, should be growth friendly and equitable. Efforts to raise potential output through structural reforms remain critical. Although the structural reform agenda should be country specific, common areas of focus should include strengthening labor market participation and trend employment, tackling legacy debt overhang, and reducing barriers to entry in product and services markets. In Europe, where the tide of refugees is presenting major challenges to the absorptive capacity of European Union labor markets and testing political systems, policy actions to support the integration of migrants into the labor force are critical to allay concerns about social exclusion and long-term fiscal costs, and unlock the potential long-term economic benefits of the refugee inflow. Fiscal consolidation is a policy aimed at reducing government deficits and debt accumulation. Source Publication: The OECD Economic Outlook: Sources and Methods.

11 Short video by the IMF on the Eurozone EconomyEurozone Economy

12 Eurozone Long Term Unemployment Rate Drops to 5.3% in Q3-2015 even as Overall Unemployment fell to 10.3% in May 2015

13 Eurozone Youth Unemployment Still High but Falling to 22%

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15 Source: https://www.ecb.europa.eu/pub/pdf/other/mb201207_focus03.en.pdf: https://www.ecb.europa.eu/pub/pdf/other/mb201207_focus03.en.pdf

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17 Inflation in the Euro Area What is inflation and what causes inflation?

18 No Core Deflation in the Eurozone But There Certainly has been Disinflation

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20 MV = PY

21 Is there a way to theorize about the structure of the Euro Area? The Basic problem of Monetary, Fiscal, and Exchange Rate Policy

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