Press Release: Quarterly report on the euro area: activity rebounds temporarily

Growth in the euro-area economy rebounded in the third quarter of 2007, but economic activity is expected to moderate in the next few quarters, indicates the Quarterly Report on the Euro Area (QREA). Tighter financing conditions, reduced confidence in the aftermath of the financial market turmoil and rising inflation, among other factors, will weigh on growth in the next few quarters. Activity will, however, continue to be supported by robust employment growth and record-high profitability in the non-financial corporate sector. The report also shows that better macroeconomic policies have been instrumental in ensuring reduced inflation volatility in the euro area notwithstanding the recent increase in prices. It goes on to analyse the evolving role of the euro since its introduction in 1999. Finally, the QREA looks at the long-term structural performance of the euro area, reviewing developments in structural reforms since the launch of the single currency and examining the causes of the sluggish productivity performance in recent years.