Growth and Adjustment Challenges for the Euro Area

Abstract

This paper reviews the growth record of the member countries of the euro area and assesses the outlook for future economic performance. We describe how the external and fiscal adjustment challenges facing the euro periphery amplify the growth risks facing these countries. We address how growth prospects can be improved by shifts in the macroeconomic policy mix, carefully-timed structural reforms, debt restructuring and the resolution of the existential crisis facing the euro area.