The current recovery: continuity or contrast?

The economic performance of the euro area during the current recovery has been relatively moderate compared to the evolution of economic activity in previous expansion phases. Among the five largest Member States, Italy, Germany and the Netherlands stand out as the countries experiencing considerably slower output growth than in previous upturns. France is an exception to these patterns, since its current recovery is broadly in line with previous phases of acceleration in economic activity. The growth divergence between the current and the average of the past four recoveries in not fully explained by lower potential output. The euro area has also witnessed a milder acceleration of employment. This stems from a pronounced shake-out of employment in the Netherlands and lower employment growth in Germany and France, while the employment pattern in Italy and Spain has been in line with the average of previous recoveries. Reflecting lower output growth compared to the past, labour productivity growth has been relatively weak in this recovery due to smaller gains in all countries considered, apart from France. A possible interpretation of these developments is that the divergences in growth and in its sources, which prevail in the euro area, partly reflect differing recourse across countries to the adjustment mechanisms that are available within an economic and monetary union.

• Primary Source