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Chapter 1: The European Economy: Current Situation and Economic Outlook for 2005

Author

Listed:
  • Lars Calmfors
  • Giancarlo Corsetti
  • Seppo Honkapohja
  • John Kay
  • Willi Leibfritz
  • Gilles Saint-Paul
  • Hans-Werner Sinn
  • Xavier Vives

Abstract

This chapter discusses the current situation and economic outlook for 2005 for the European economy. As a main scenario, it is forecasted that GDP in the euro area will grow at about the same rate as in 2004, that is around 13/4 percent on average. The recovery remains fragile and depends on continued growth in the world economy. The recent rise of the euro against the dollar and any additional oil price hikes represent significant downside risks to the basic scenario. For economic policy the basic scenario is that interest rates remain at current levels and that the stance of fiscal policy is similar to 2004. An appendix to the chapter reviews the current problems with the Stability and Growth Pact of the EU.

Suggested Citation

  • Lars Calmfors & Giancarlo Corsetti & Seppo Honkapohja & John Kay & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2005. "Chapter 1: The European Economy: Current Situation and Economic Outlook for 2005," EEAG Report on the European Economy, CESifo, vol. 0, pages 9-38, March.
    • Handle: RePEc:ces:eeagre:v::y:2005:i::p:9-38
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    References listed on IDEAS

    as
    1. Lars Jonung & Martin Larch, 2006. "Improving fiscal policy in the EU: the case for independent forecasts [‘Fiscal forecasting: The track record of the IMF, OECD and EC’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 21(47), pages 492-534.
    2. Lars Calmfors, 2003. "Fiscal Policy to Stabilise the Domestic Economy in the EMU: What Can We Learn from Monetary Policy?," CESifo Economic Studies, CESifo, vol. 49(3), pages 319-353.
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