Taking Europe’s pulse – The Economist (blog)

11 months ago Comments Off on Taking Europe’s pulse – The Economist (blog)

Our interactive overview of European GDP, debt and jobs

THE recovery in the 19-strong euro area is continuing but it is nothing to write home about. Growth had picked up to 0.5% in the first quarter of 2015 (compared with the final quarter of 2014), the strongest performance since the upswing started in the spring of 2013. Since then, however, the pace of expansion has slackened, to 0.4% last spring and an average quarterly rate of 0.3% in the second half of last year. Indeed, euro-zone GDP in the final quarter of 2015 was still below its pre-crisis peak of early 2008 whereas America’s was almost 10% above its peak of late 2007.

The sluggish pace of the recovery has been especially disappointing given the fact that the euro area has benefited from a double fillip. First, the fall in energy prices caused by the collapse in the oil price acted in much the same way as a tax cut, boosting consumer spending—the main engine of the recovery. Second, the European Central Bank has carried out quantitative easing—creating money to buy financial assets—since March 2015. Together with the introduction of negative interest rates in June 2014, this has brought the euro down and kept it weak, helping exporters and contributing to a big current-account surplus of 3.7% of GDP in 2015.

The outlook for growth in 2016 now looks feebler and more uncertain following the sharp falls in European equity markets, particularly of banking shares, since the start of the year. To the extent that this setback to stockmarkets undermines consumer and business confidence, it is likely to drag down growth. The slowdown in China and emerging economies, which account for a quarter of euro-zone exports, will also harm the recovery by hurting exporting companies. Germany will be particularly affected since the Chinese market has been a lucrative one for its exports of investment goods and luxury cars. Despite these brakes a recovery of sorts should remain intact, for three reasons. Renewed declines in oil prices will further boost household budgets. The European Central Bank is poised to loosen monetary policy still further when its governing council meets in March. And spending on refugees, especially in Germany, will provide a modest fiscal stimulus.

Our interactive graphic (updated February 18th 2016) enables readers to inspect the health of European economies (including the nine member states of the European Union that do not belong to the euro) in a variety of ways, including data on jobs and the public finances as well as GDP.

 

Taking Europe’s pulse – The Economist (blog)

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