Europe: a continent in decline?

Introduction Euro-pessimism is back. The last bout of optimism about the economic prospects of the European Union came at the beginning of 2001, following the launch of the Lisbon reform agenda (which was supposed to modernize the EU economy and make it the most dynamic and competitive in the world) and the first indications of a significant slowdown of the US economy. At that time many European ministers expressed their belief that Europe, and the European Union in particular, was poised to become the engine of growth for the world economy. Economic performance has not been kind to such forecasts. Between 2001 and 2003 average economic growth in the Union was slightly above 1 percent, versus 2 percent in the United States. Prospects for 2005/2006 are not much better, with US growth according to the OECD projected at 3.5 percent against 2.3 percent in the European Union. Looking backward does not offer much consolation either: between 1990 and 2000 GDP increased at an average annual rate of 3.2 percent and 2.1 percent in the United States and in the European Union respectively. Focusing on the performance of the Euro area rather than on the Union would only make the gap with the United States larger. Adding to the concerns of the Euro-pessimists is the steady erosion of the EU export share in world markets. Between 1990 and 2001 Germany's export share fell from 12.1 percent to 8.1 percent. [ABSTRACT FROM AUTHOR]