Recent indicators have brought signs of a renewed recovery in the euro-zone economy, reflecting the beneficial effects of lower oil prices and the decline in the euro exchange rate. But the picture continues to be clouded by the uncertainty surrounding the ongoing Greek crisis and the potential negative effects of an escalation of the situation. And even if the crisis is soon resolved, it is far from clear that euro-zone growth will be strong enough to eradicate the danger of deflation in the region and to help the peripheral countries to address their persistent debt problems.“We have nudged our forecast for eurozone GDP growth higher to 1.5% this year, but we expect a renewed slowdown in 2016 as the boosts from lower oil prices and the euro fade and the structural constraints on growth reassert themselves. As such, suggestions that the ECB may be able to cut short its QE programme look premature.” – said Capital Economics in a report on Wednesday
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