Is the euro area drifting into a liquidity trap (a combination of low interest rates and low inflation) as a consequence of the corona crisis? There is a heightened risk of this, but the policy measures taken are preventing negative trends.
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The Finnish, Swedish and German economies weakened almost simultaneously in March. The latest indicators show signs of a pick-up, but uncertainty will slow the recovery.
Euro area productivity growth has been slowing since the turn of the millennium. Economic policy that bolsters stability in the economy is a vital factor for productivity growth.
Concerns about a protracted period of low growth soon followed the recovery from the Great Recession. Recent strength in the euro area economy does not exclude the risk of secular stagnation.