Is the euro-zone’s recovery too good to last?
Fears that the euro-zone’s recovery is going into reverse seem overdone. Weakness in Q1 related partly to temporary factors, the effects of Italian political turmoil have been contained and prospects for domestic spending are strong. But the long-term outlook is not very bright. Rebalancing is incomplete, labour market reform has a long way to go and existing backstops are not strong enough to prevent another crisis.