European Economic Forecast: Billowing Clouds in the US but no Recession in Europe; Globalisation can create European jobs at greater rate than it destroys them
Despite the subprime-triggered financial crisis in the US, the European economy will continue to grow this year, but with less dynamism, according to the European Economic Advisory Group (EEAG) at CESifo, a unit of the Ifo Economics Institute, at the University of Munich.The seven European economists comprising the non-partisan advisory group, which includes Prof. Jan-Egbert Sturm of the KOF Swiss Economic Institute, released their yearly report today in Brussels. In it, they forecast a GDP growth of 1.8 percent for the Eurozone, with a slightly higher figure of 2.1 percent for the EU27. This slowdown, they assert, would bring Europe back from a period of stormy growth to one that better reflects its potential.The factors driving European growth down are the appreciation of the euro against the dollar and the consequent reduction in US imports. Investment growth in Europe will decelerate, but employment will
continue to improve as a result of the still-positive output gap. Private consumption, in the face of creeping inflation and moderate wage increases, will grow at about the same rate as in 2007.
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