Financial Crisis Continues but Euro Area Decision Makers Have Relieved Some of the Pressure
- Inaction by the European Central Bank on sovereign debt purchases and its delay in establishing the European Stability Mechanism (ESM) have raised fears regarding the bank’s commitment to back weaker economies
- Current economic conditions remain weak and unemployment continues to rise, with no room for upward adjustment of projections
- China still represents a small but growing market for exports from Europe, while Europe remains one of the primary destination for Chinese exports
- The less likely event of a short-term hard landing in China could have greater impact on industries and businesses that are highly dependent on export growth to China
- The shift toward household consumption in China could enhance European growth through exports over the long term
