The European economy has shown further signs of recovery in response to the continued improvement in global economic and trade conditions. But the fiscal crisis in the euro-zone’s peripheral economies is casting an ever darker shadow over the medium-term outlook for the region. Rescue packages for Greece, and perhaps others, may prevent sovereign debt defaults and hence keep the currency union intact in the foreseeable future. Meanwhile, the drop in the exchange rate is something of a silver lining for the core economies’ exporters. Nonetheless, with the peripheral economies likely to remain deep in recession, and the core economies set to embark on their own fiscal consolidations from next year, the recovery will remain fragile at best. Against that background, concerns about the future of the euro-zone will continue to weigh on the euro.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services