While the recovery in 2002 is expected to initially proceed at a gradual pace, real GDP growth rates in the euro area should again be in line with potential growth later this year and solid growth rates should be attainable by 2003. Business confidence has considerably improved in the euro area over the past few months and the conditions for a sustained upswing in domestic demand continue to be in place, including favourable financing conditions.
The more positive international environment should also help stimulate euro area exports, thereby fuelling aggregate demand in the euro area. Finally, sound fundamentals and the absence of major imbalances support the positive outlook for the euro area economy.