In this report, we outline how the eurozone crisis has evolved. We discuss how European Monetary Union (EMU) membership shaped both the economic crisis itself and the crisis response.
The peripheral countries are at very different stages of economic recovery and rebalancing. Growth has returned and private and public balances have improved. Unemployment and public debt levels remain high, whilst part of the rebalancing may just be cyclical.
The build-up of large private sector imbalances related to a housing boom and the financial sector were the prime cause of the crisis. Ireland has successfully reformed its banking sector and economic performance is strong, but challenges remain.
Both high private and public sector debt prior to the crisis are to blame for the country’s deep recession and public debt crisis. It remains to be seen whether Portugal’s low growth problem has been addressed, with unemployment and indebtedness still very high.
Economic Report Dutch version
We expect growth in Europe to accelerate gradually, although the economy has far from fully recovered from the Global Financial Crisis. Substantial deterioration in the Greek situation and/or the geopolitical conflicts remain downside risks.
The Portuguese economy returned to growth in 2014 but medium term prospects remain weak. Meanwhile, with an election this year, the reform effort while this year’s budget is based on overly optimistic assumptions.