The Eurozone economy saw its fastest rate of growth for 10 years in 2017 according to Eurostat. The European Commission’s EU statistics service stated that the 19 European countries collectively experienced 2.5% growth last year.
The Eurozone is the group of European countries that have adopted the Euro as its currency. This excludes the UK, who decided to remain with the pound sterling. This is the fastest Eurozone growth rate since the 3% of 2007.
Eurozone Economy Boosted by European Central Bank Initiative
This growth rate is likely the result of the European Central bank initiative to drive up growth in the Eurozone. Part of its stimulus program involved the bank cutting its interest rate to zero. It also adopted a program of quantitative easing in the form of financial asset purchases. This involved a monthly expenditure of billions of euros.
Sustained Recovery in EU Economy
The growth rate in the final quarter of 2017 was 0.6%. This was a slightly slower rate than the July September rate, but still indicative of a sustained recovery in the EU economy, particularly that of the Eurozone. It is because of this that the region is looked on as being a strong component of the global economy, and one reason for the improvement in the global economy itself.
Eurozone Growth Rates for Next Two Years Revised Upwards
Not only is the Eurozone interest rate currently set at 0%, but a negative rate has been set for bank overnight deposits. This is in contrast to the US Federal Reserve. The Fed has applied five interest rate hikes since the low rate of just after the financial crisis. It also terminated it asset purchases back in 2014.
The European Central Bank has predicted growth of 2.3% for this year, compared to the 1.8% it had forecast previously. Its forecast for 2019 has also been raised by 0.2 percentage points to 1.9%. Brexit should have no effect on this because the UK is not in the Eurozone. Its withdrawal from the EU should, therefore, have a minimal effect on the Eurozone.