European economy: Outlook 2011

The upswing seen in recent quarters was mainly thanks to the rebound in world trade. Government stimulus packages also helped. In 2011 public and private sector austerity drives will weigh on the economy. Nonetheless, Allianz believes the upward trend in the euro area will continue.

“The drivers of the upswing will continue to prevail. However, the momentum of the recovery will remain subdued. Following growth of 1.7 percent in the euro area this year, we expect gross domestic product to increase by 1.6 percent in 2011,” said Michael Heise, chief economist at Allianz. The gap in growth from country to country will still be considerable, if not quite as glaring as in 2010. In 2011 Germany is again likely to lead the way with growth of 2.6 percent, while Greece will again bring up the rear with a 2 percent decline in GDP.

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