EU11 Regular Economic Report, Issue #26, January 2013
The economic report comprises two parts: a macroeconomic report and a special topic on the issue of economic policy interest. According to the first part, in 2012 the EU11 economies have outperformed the rest of the European Union (EU). In the midd...
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| Format: | Economic Updates and Modeling |
| Language: | English en_US |
| Published: |
Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2013/01/17183435/eu11-regular-economic-report-macroeconomic-report-faltering-recovery-special-topic-economic-growth-implications-aging-european-union http://hdl.handle.net/10986/16489 |
| Summary: | The economic report comprises two parts:
a macroeconomic report and a special topic on the issue of
economic policy interest. According to the first part, in
2012 the EU11 economies have outperformed the rest of the
European Union (EU). In the middle of a recession in the
Euro area, the EU11 region is set to expand by about 1
percent in 2012. However, the recession in the Euro area
continues to dampen the EU11 economic performance. With an
uncertain economic outlook in the medium term, the EU11 need
to pursue decisive economic policies on two fronts to
safeguard and accelerate their growth momentum. First, a
prudent macro-policy stance should continue to shore up the
confidence of financial markets. Second, the medium-term
economic growth potential of the EU11 can only be realized
if structural barriers to economic activity are removed.
Second, the current and projected low fertility levels for
Europe imply that the region will go through an
unprecedented process of population aging, causing dramatic
changes in the age structure of European societies. These
changes in the age structure can have significant effects on
economic growth. This paper analyzes the quantitative impact
of the projected demographic changes on economic growth
through their effect on the factors of production, as well
as the role that these will play in shaping income
convergence in the region in the decades to come. The
empirical results indicate that EU11 is likely to experience
a sizable reduction in income per capita growth and thus in
the speed of income convergence to the rest of the EU due to
the expected demographic developments in the region.
However, increasing labor force participation as well as
improving the skill level of the labor force in the EU11
appears to be a powerful instrument for fostering economic
growth and further convergence in the EU in the context of
aging societies. |
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