At the same time, there has been some progress in the moves to strengthen fiscal discipline within the euro area, as evidenced by the fact that most of the EU member states have signed the new “fiscal compact.” Yet, it is still uncertain whether individual countries will be able to steadily correct the imbalances through fiscal reforms and increases in their competitiveness.
Moreover, initiatives to address the crisis, such as the establishment of the European Stability Mechanism and the enhancement of other “firewalls” for containing market turmoil, are still in progress. Thus, uncertainty regarding the outlook has not been resolved. Moreover, there are heightened geopolitical risks relating to Iran. Crude oil prices have been rising recently, reflecting the situation in the Middle East.