Publication: EU11 Regular Economic Report : Coping with External Headwinds
Date
2012-06
ISSN
Published
2012-06
Author(s)
World Bank
Abstract
This study claims that despite the
challenging external environment, EU11 countries did well in
2011. First, economic growth strengthened to above 3 percent
(from around 2 percent in 2010) and the region fully
recovered its output losses from the global financial
crisis. Second, fiscal measures delivered reduction of
around 3 percent of GDP in the EU11 average fiscal deficit.
Third, the financial sector remained resilient to renewed
concerns about negative feedback loops between insecure
sovereign debtors and fragile financial markets. However,
the good performance conceals important shifts in economic
sentiment that occurred during the year. While the growth
momentum was still strong in the first half of 2011, it
slowed toward the end of the year, as the region started to
feel the impact of lingering concerns about European
sovereign-debt markets, creeping oil prices, and the global
slowdown. With the downward trend in economic activity,
labor markets remained slack. Unemployment rates hovered
around those recorded in the midst of the global financial
crisis with sluggish employment growth. The paper points out
that the European economic growth model has delivered
unprecedented welfare to the continent over the last half
century. In spite of its remarkable success, several aspects
of the European economic growth model require reform to
ensure that it is sustainable. Among the priorities for many
European states today are providing incentives for labor
mobility, making public finances more sustainable, and
adapting social security systems to demographic
developments, and harmonizing regulation across borders.
This note zeroes in on the EU11 region to explore what is
driving their prosperity and growth. The main messages
related to the drivers of growth and prosperity in EU11 are
as follows: 1) Convergence; 2) Trade and finance; 3)
Enterprise and innovation; 4) Labor; and 4) Government.
Citation
“World Bank. 2012. EU11 Regular Economic Report : Coping with External Headwinds. © Washington, DC. http://openknowledge.worldbank.org/handle/10986/11896 License: CC BY 3.0 IGO.”