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Europe in 2015: Uncertain, Uneven and Unpredictable

The “sick man” of Europe may very well be all of Europe. Since the Great Recession of

200!200"# $rowth has been $enerally slow an% painful# an% the %an$er of prolon$e%

sta$nation in Europe is a very real possibility. The euro has %roppe% to its lowest value

in nine years. &ith Europe accountin$ for 2'( of $lobal tra%e# its recovery is imperative

to the health of the $lobal economy. The forecast for 20)' is lookin$ %ismal# only

mar$inally better than 20)*.

“+rankly# it,s very har% to be optimistic about Europe. There are lots of issues#”

says -auro Guilln# &harton mana$ement professor an% %irector of The /au%er

nstitute. The continent is facin$ a “%eceleration of the German economy. Southern

Europe is not workin$ as it was suppose% to an% there are lin$erin$ problems with hi$hunemployment an% hi$h ta1es#” Guilln a%%s.

nless there is a %ecisive chan$e in structural# fiscal an% monetary policies# Europe may

continue to lan$uish in the upcomin$ year# accor%in$ to the 3r$anisation for Economic

4o!3peration an% 5evelopment 63E457. “Europe is at the center of weakness in the

$lobal economy   Twitter  #” says 4atherine /. -ann# the 3E45,s chief economist. The

institution forecasts $rowth in the euro8one to be 9ust ).*( in 20)'. That,s an

improvement over the low 0.:( for 20)*# but it,s well below what Europe shoul% beachievin$.

/ast year# the overall worl% economic $rowth rate stoo% at ;.)(.

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?y havin$ several countries %rastically re%uce their %eficits all at the same time# $rowth

 was un%ercut an% the a%9ustment has been incre%ibly painful. t,s a 4atch!22#

notes 3livier 4hatain# strate$y an% business policy professor at BE4 business school in

=aris an% senior fellow at &harton,s -ack nstitute for nnovation -ana$ement.

“Frankly, it’s very hard to be optimistic aboutEurope. There are lots of issues.” –Mauro Guillen

“/ow inflation an% %eflation are becomin$ ma9or problems#” 4hatain notes. The

inflation rate has “been very far below the European 4entral ?ank,s 2( tar$et for a very

lon$ time# which makes %ebt consoli%ation much more %ifficult.” nflation has staye%precariously low# hoverin$ at 0.;(. Spain an% Greece have actually been in %eflation# a

tren% that coul% sprea% to the rest of Europe.

nemployment in Europe# with the e1ception of the .C.# is in the %ouble %i$its an% not

forecast to %rop until 20)D. as $oo% as it in the .S. > than it was in

the )""0s.”

Bowever# within Europe# countries with very %ifferent personalities are contributin$ to

an unstea%y recovery effort that is affectin$ the entire continent.

http://knowledge.wharton.upenn.edu/faculty/chatain/http://knowledge.wharton.upenn.edu/faculty/chatain/http://mackinstitute.wharton.upenn.edu/http://knowledge.wharton.upenn.edu/faculty/guillen/http://knowledge.wharton.upenn.edu/faculty/chatain/http://mackinstitute.wharton.upenn.edu/http://knowledge.wharton.upenn.edu/faculty/guillen/