As predicted last year, the Eurozone economy has seen the best year of growth in a decade. According to Eurostat, the EU’s statistics agency, the economy of the zone grew 0.6% between September and December when compared to the previous quarter. The agency also noted that throughout 2017 it grew by a total of 2.5%, which is the best it’s seen since 2007.
“Looking ahead, surveys suggest that the region’s upturn will gather pace,” said Stephen Brown, European economist at Capital Economics. “We expect the euro zone’s upturn to match last year’s strong pace in 2018, with annual GDP growth of 2.5 percent.”
The financial crisis of 2008 and ongoing debt problems in some states had caused fears about the future of the currency. The economic issues suffered by a number of Eurozone members, including Greece, Ireland, Portugal and Cyrpus added to these doubts. The bailouts from the other Eurozone countries and the international monetary funds also hit the EU hard and lead to massive budget cuts. Despite this, the growth seen in the last year has given a much needed confidence boost as well as bringing down unemployment.
Although the growth of the Eurozone economy has become less reliant on the larger economies like Germany and France, the GDP of these countries also saw significant growth last year. The GDP of Germany, the biggest economy in the Eurozone, grew by 2.9% last year – which is nearly as high as that seen in Spain.
“For the year 2018 as a whole, a strong increase of 2.5 percent is still likely, even if the statisticians have slightly revised previous data downwards,” Joerg Kraemer, chief economist at Commerzbank, said in a note on Germany. “We continue to believe that the upswing could continue for another two or three years despite the roll-back of labor market reforms because cyclical tensions on the labor market are not yet in sight,” he added.
The economic recovery seen in the last year has been boosted by a massive stimulus programme introduced by the European Central Bank, as well as the cutting of interest rates. “The acceleration of production growth is unlikely to be a one-off as the outlook for industry remains rosy,” said Bert Colijn, senior euro zone economist at ING bank. “Given the current backlog of work in industry, it is no surprise that hiring and investment in capital goods are high on the list of businesses. This adds to the strong economic picture for the start of 2018,” he said.
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