Europe Is 'Stuck In A No-Growth Trap'

euro austerityA look at fiscal belt-tightening.

Photo: Morgan Stanley

In a new report titled Stuck In A No-Growth Trap, Morgan Stanley’s Europe Economics team cut its 2012 and 2013 GDP forecasts for the euro area.”The reasons for revising down our growth outlook are slower global growth, additional austerity measures, elevated funding costs and surging policy uncertainty,” wrote economist Elga Bartsch.

“Instead, we now expect the euro area economy to again contract after having stabilised in early 2012.”

Her current forecasts for the euro area:

  • 2012: -0.5% (previously -0.3%)
  • 2013: 0.0% (previously +0.9%)

“Only in the spring of next year do we now expect the euro area to return to positive growth rates,” she writes.

The report also included forecasts for individual countries in the euro area.

Click Here To See Morgan Stanley’s Forecasts For Europe’s Major Economies >

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