As other emerging economies reliant on tourism (about 25 percent total contribution of tourism-related industries in GDP and employment), Croatia has been hit hard by the pandemic and two devastating earthquakes, leading the economy to contract by 8.0 percent in 2020. Vaccinations have been rolled out to about 38 percent of the population (end-June 2021). Staff projects growth to bounce back to 5.4 percent in 2021, driven by a rebound in the services sector and investment, aided by fiscal and monetary policies, and bolstered by large EU grants over the medium-term.
The financial sector is mostly comprised of the banking sector, which largely provides insurance and asset management services. A large part of banking system assets relates to subsidiaries and branches of foreign banks. The banking sector poses risks by virtue of its size and concentration. The Cypriot banking system has weathered the crisis better than many other euro zone area countries. Significant headwinds for the overall banking system are expected, and the cooperative banks appear particularly vulnerable.
The staff report for the 2004 Article IV Consultation on Greece focuses on economic developments and policies. Rising incomes and a falling, though still high, unemployment rate underpinned strong household consumption, while increased profitability spurred investment spending, especially construction. Inflation has been above the euro area average, eroding international competitiveness and export market shares. Regarding structural policy, the authorities recognized that Greece still lags significantly behind the European Union in real per capita income despite the economic boom.
This 2008 Article IV Consultation highlights that after 15 years of impressive growth led by a housing boom, the Spanish economy has entered a sharp downturn in the wake of the global liquidity squeeze since mid-2007. Executive Directors have commended the authorities for their timely and substantial fiscal and financial sector responses to help cushion the downturn. They have emphasized that these efforts need to be complemented by reforms to bolster competitiveness and to avoid a prolonged period of slow growth and high unemployment.
The Selected Issues Paper focuses on Cyprus' banking sector vulnerabilities and its pension system. The most salient risks for the banking sector come from commercial banks domiciled in Cyprus. These banks have the strongest links with the local economy and are likely to experience further deterioration of their loan portfolios in both Greece and Cyprus. The paper reveals that, in 2011, Cypriot banks face capital needs estimated at €3.6 billion on a preliminary basis.
This paper discusses the economic performance of Germany. The economy of Germany is projected to slowly rebalance, with domestic demand supported by tight labor market, accommodative monetary conditions, and, in 2016, a fiscal expansion. Declining medium-term growth prospects, however, continue to hold back domestic investment and push up savings, preventing faster rebalancing. Progress has been slow on addressing needs in public infrastructure and stimulating competition in services sector, while mounting aging costs and a successful labor market integration of women and refugees require further policy action. Full use of the room available under fiscal rules to finance additional public investment and growth-friendly structural reforms would be appropriate.
, of 5.4 and 5.8 percent growth respectively driven by a rebound in the services sector (assuming % and nearly full recovery of tourist arrivals in 2021, and 2022 respectively), and investment which will be bolstered by large EU investment grants over the medium-term. Over the medium term, growth is projected to ease closer to 3 percent. Inflation is projected to pick up and stay at 2 percent through 2023, in line with the ECBinflationtarget. There are large risks on both sides, including from virus mutations in the near-term which could result in significant
detailed description of the baseline model.
8 The steady-state level of unemployment in the long run U ¯ s s and the steady-state growth rate G S S Y ¯ are assigned priors equal to 3.63 and 3.5 respectively, the steady-state inflation target π ss is assumed equal to the ECBinflationtarget of 2 percent.
/ Defined as the ratio of real wages to productivity.
24. The authorities have not announced a specific target date for euro adoption, pending more progress on fiscal consolidation and economic alignment with the euro area . They continue to strive to meet the Maastricht criteria for euro entry in a sustainable manner. The CNB's decision to reduce the inflation target to 2 percent from 2010 will align it with the ECB's inflationtarget. Staff reiterated that euro adoption remains an important opportunity for reaping further gains from enhanced trade and investment