Economic activity in the euro area is recovering moderately as a whole, although the contrast has been increasing further between the strong performance of Germany and the performance of peripheral countries with serious fiscal problems such as Greece and Portugal. As for the outlook, the situation as a whole is likely to remain unchanged, with the moderate recovery continuing.
However, since around April 2011, doubts have emerged regarding the credibility of Greece’s plans for fiscal reconstruction and funds procurement, leading to a surge in the yield on 10-year Greek government bonds to record levels of more than 15 percent. The surge triggered a rise in the yields on government bonds issued by other peripheral countries.