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Section III. Prospects for Europe
Published online by Cambridge University Press: 26 March 2020
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Activity picked up markedly in the EU area last year; growth was estimated to have been 2.6 per cent compared with 1.8 per cent recorded in 1996. However the aggregate movement masks some significant divergences in economic performance. Growth was relatively modest, at between 2–2½ per cent in Germany, France and Austria, whilst Italy and Sweden recorded growth rates below 2 per cent for the second year running. The fastest growth was achieved in the Irish Republic where output expanded by over 10 per cent last year, following cumulative growth of 27 per cent in the previous three years. Finland also recorded rapid growth of nearly 6 per cent and nearly all the remaining EU countries enjoyed growth rates of 3 per cent or above. Outside the EU, activity remained robust in Norway, Poland and Hungary but was markedly weaker in the Czech Republic and Switzerland. Indeed real GDP has barely changed in Switzerland since 1990, partly reflecting the strength of the Swiss franc, although there are now signs that growth will be stronger in 1998 as the franc has depreciated since the end of 1995.
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Notes
(1) See Box A in the World Economy Forecast in the January 1998 Review.
(2) See for example his recent articles ‘Japan's Trap’ and ‘Further Thoughts On Japan's Liquidity Trap’, available on the internet at http://web.mit.edu/krugman/www/japtrap.html and http://web.mit.edu/krugman/www/liquid.html respectively.
(3) Estimates of the cost of several recent banking crises in OECD countries are reported in the June 1998 OECD Economic Outlook, pp. 29-30. General government liabilities may also rise this year if the central government proceeds with the planned take-over of the debts of two public corporations—the Japan National Railway Settlement Corporation and the National Forest Service. OECD estimates suggest that these liabilities could amount to 5¼ per cent of GDP. This measure is not reflected in the present forecast.
(4) For further details see the Bank for International Settlements publication ‘The Maturity, Sectoral and Nationality Distribution of International Bank Lending’, May 1998. (Available on the internet at http://bis.org)
(5) Thailand, Indonesia, Malaysia, Singapore, South Korea, the Philippines, Taiwan and Hong-Kong.