Greater Financial Stability Will Not Prevent the Continuation of an Economic Downturn in the Euro Area
- Provisions for financial stabilization by the European Central Bank (ECB) during the summer have not yet provided relief to the nonfinancial economy and may not until ESM and banking union are in full operation
- While financial conditions are currently relatively stable, confidence remains weak
- The declines of The Conference Board Leading Economic Index® (LEI) for the Euro Area in both September and October were caused by weak performance among confidence indicators, which will limit the chance of near-term recovery
- There is more evidence that economic weakness is spreading from troubled to core countries
- Europe’s growth outlook for 2013 remains weak, while only modest or slowing growth is expected elsewhere in the global economy
- Although the long-term growth trend will slow globally, Europe’s demographics and economic structure suggest that countries in the region will grow even slower than other economies
