Press Release: The economic recovery in the euro area is gathering momentum, albeit at a modest pace

What has come to be termed as the "Great Recession" seems to have come to an end in the third quarter of 2009. The rebound in activity reflects improvements in the external environment, in financial conditions and in confidence. But the outlook remains uncertain as the rebound is underpinned by the massive support provided by governments and central banks worldwide which eventually will have to be scaled back and depends on the ability of the banking sector to increase the present levels of lending to the economy. The continued, albeit more moderate, increase in unemployment is a source of concern both socially and economically.

This is the updated analysis of the economic situation contained in the last Quarterly Report on the Euro Area (QREA) in 2009. It goes on to argue that to face up to these challenges, it is essential for the euro area to re-energise its structural reform agenda. In one of its sections that looks at public support for reforms, the QREA sees a window of opportunity to lay the foundation for a solid and sustainable recovery. Structural reforms aimed at stimulating research and innovation, competition and human capital should be particularly encouraged as they can have sizeable positive effects on growth and employment. The QREA also looks at how long-term trends in the euro-area banking sector may have become affected by the crisis.