However, in a phase like the current one, dominated by uncertainty and weak cyclical conditions, unless the increase in the propensity to save is accompanied by a sufficient recovery in investment and production, there may be a decrease in aggregate demand and income, in turn fuelling further growth in saving for precautionary reasons and thus triggering a vicious cycle.
Geopolitical risks, as well as developments in global financial markets and emerging market economies, may have the potential to affect economic conditions negatively. Other downside risks include weaker than expected domestic demand and insufficient implementation of structural reforms in euro area countries, as well as weaker export growth.