There was a shift in the global economic cycle towards slower growth during the first half of 2018. The trade war and Brexit increase the risk of recession.

The aim of the two-tier system for remunerating excess liquidity holdings is to promote monetary policy transmission via banks to firms and households. The system is part of the ECB Governing Council’s broad package of monetary accommodation.

Global growth has slowed substantially during the course of the current year. One cause of this has been the trade war between the United States and China. Brexit, too, has added to the uncertainty surrounding the future course of the economy.

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.

The economic outlook for the euro area has deteriorated rapidly. The impact of Brexit on Europe as a whole is hard to predict. Another factor overshadowing the global economy is the trade dispute between the USA and China.

The summary provides a simple introduction to the assessment of developments in the global economy and monetary policy presented in the March edition of the Bank of Finland Bulletin.

The fastest stage of growth in the euro area looks to have passed, but momentum remains strong. Uncertainty is being fuelled by protectionism and Italy’s domestic economic policy.

Following the steep contraction caused by the financial crisis, there have been substantial differences in economic performance across the different countries in the euro area. Healthy economic structures appear to have facilitated a speedier recovery.