Directorate General for Economic and Financial Affairs (ECFIN). European Commission
The latest issue features two focus sections, the first of which assesses the impact of uncertainty on consumption and investment. It finds that uncertainty has a significant negative effect on household consumption and productive investment, and that its impact has increased since the crisis. The second focus section analyses the role of FDI in preventing macroeconomic imbalances, concluding that FDI can boost productivity and, especially if targeted at the tradable sector, support external rebalancing in the host economy. A special topic looks at recent capital flow developments in the euro area and finds that financial capital flows into and from euro area economies are showing signs of normalising. A final contribution examines inventory developments in the euro area, suggesting that stockbuilding activity by companies has weakened since the onset of the crisis, partly driven by depressed sales prospects but also by tighter financing constraints.