While there are signs that some of the idiosyncratic domestic factors dampening growth are fading, global headwinds continue to weigh on euro area growth developments. Moreover, the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets is leaving marks on economic sentiment. As a result, the slower growth momentum has extended into the current year.
At the same time, the euro area economy continues to exhibit a high level of capacity utilisation, and the unemployment rate has continued its downward trend. In March it stood at 7.7%, its lowest level since September 2008. Employment gains and rising wages continue to underpin the resilience of the domestic economy.