OECD Observer
Country snapshots 2017-18: Euro area
Investment weakness
euro area,oecd,economy

Economic growth is projected to remain subdued. Despite supportive monetary conditions, investment weakness will persist, reflecting low demand, banking sector fragilities and uncertainties about European integration. High unemployment and modest wage growth will hold back private consumption, while exports will be hampered by soft global trade and by weaker growth in the UK following the Brexit referendum. Inflation is set to rise very gradually. Across euro area countries, major differences in growth and unemployment prospects will persist.

The monetary policy stance should remain accommodative until inflation is clearly rising to the target of near 2%. However, monetary policy has become overburdened and should get more support from fiscal and structural policies. The projected fiscal stance is only slightly expansionary: a stronger fiscal stimulus with accompanying growth-friendly changes in the spending and taxation structure would rebalance the policy mix and support long-term growth. Completing the single market in services and network sectors would boost investment and productivity. Faster resolution of non-performing loans is also essential for stronger investment and may require establishing asset management companies and waiving existing bail-in procedures. Completion of the banking union would strengthen confidence and resilience to future crises.  

GDP growth


Current prices EUR billion




% real change



10 387.8 1.7 1.6 1.7

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©OECD Observer No 308 Q4 2016