Economic developments in the EU

6 1.2 Economic developments in the EU .....

The combination of weak foreign and strong domestic demand led to a gradual widening of the trade deficit , Growing uncertainties in the international environment Over the course of 1998 the global macroeconomic environment was characterised by high volatility in financial markets and considerable swings in investor confidence .

At the present juncture , electronic money is not a widespread phenomenon .

We stand at a critical juncture.

This reflected expectations of a continued favourable environment in both the euro area and the global economy .

Therefore , in an environment where current inflation rates were significantly

THE INTERNATIONAL ENVIRONMENT The external environment of the euro area is expected to remain favourable in 2005 and 2006 .

The impact of this change will depend on the composition of banks portfolios in the post crisis environment .

The euro area average government expenditure ratio is expected to return to its declining path , with announced tax reductions moderate for 2003 .

The Eurosystem staff projections are produced jointly by experts from both the ECB and the euro area NCBs .

THE INTERNATIONAL ENVIRONMENT The external environment of the euro area is expected to remain favourable over the projection horizon .

To sum up , the regulatory environment plays a major role in explaining labour productivity developments .

ASSUMPTIONS WITH REGARD TO THE INTERNATIONAL ENVIRONMENT The external environment of the euro area is expected to remain favourable in 2005 and 2006 .

Assumptions with regard to the international environment The external environment of the euro area is expected to remain favourable over the projection horizon .

Again , the impact of this change will depend on the composition of banks portfolios in the post crisis environment .

At the current juncture , the evidence does not suggest that stronger underlying domestic inflationary pressures are building up in the euro area .

This has established an environment of price stability in the euro area , exerting a moderating influence on price and wage setting .

However , it would appear that economic expansion in the euro area is being adversely affected by the unfolding weaknesses and uncertainties in the external environment .

The weaker international environment adversely affected external demand in the euro area and hampered business investment .

In this environment , it remains imperative to avoid broad based second round effects in price and wage setting .

Uncertainty vis à vis the global environment seemed to decrease somewhat .

However , the expansion appeared to be increasingly fragile in the face of the unfolding weaknesses and uncertainties of the external environment .

However , the expansion appeared to be increasingly fragile in the face of the unfolding weaknesses and uncertainties in the external environment .

Hence they continue to impose strong pressure on public finances as interest payments absorb a significant share of government revenue . In addition , government budgets and , in particular , unfunded public pension and health care schemes will be confronted with the serious financial consequences of ageing populations over the medium term in almost all euro area countries .

Developments in individual countries were broadly in line with these overall patterns .

Concerning trade , growth in import volumes outpaced that in exports considerably during most of 2002 .

In the current situation , it should be stressed that volatility in financial markets can temporarily exert considerable influence over monetary dynamics .

Its task is to document the Pure Theory of Law and its dissemination in Austria and abroad, and to inform about and encourage the continuation and development of the Pure Theory.

This increase came against the background of several years of relatively high real wage growth and declining profit share in the economy .

Given the current positive economic environment in the euro area , the ECB 's monetary policy is still on the accommodative side .

At the current juncture , it is difficult to determine whether or not there has been a permanent rise in liquidity preferences over recent years .

The Eurosystem also provided comments to the IASB on the latter 's exposure draft on the classification and measurement of financial instruments .

Throughout the year , the external environment supported a sustained economic expansion .

Second half of 1999 The economic environment changed gradually in subsequent months .

2 By the end of the 1960s , the international environment had changed significantly .

Worse, in this sorry state of affairs, the world may be getting a glimpse of a very ugly future.

ECB Annual Report 2001 current juncture , conditions are in place in the euro area to ensure that a recovery will take place .

Assumptions with regard to the international environment In the baseline projection , the external environment of the euro area is expected to remain favourable over the projection horizon .

In the view of the Governing Council , the uncertainty surrounding this outlook for economic activity is particularly high at the current juncture and , generally , downside risks prevail .

In fact , it should be noted that the present degree of convergence in the euro area is relatively high and does not seem to pose a significant problem at the current juncture .

The main uncertainty with regard to the above outlook stems from the external environment .

The external environment remains favourable , providing support for euro area exports .

At this juncture , however , owing to financial market developments , the uncertainty surrounding the projections is presumably larger than usual .

Meanwhile, the debt restructuring for which the eurozone not just Greece is crying out is unlikely to be politically acceptable in the current climate.