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Eurozone Economic Recovery Gathers Pace in 2015/16

 
 
 
 
 Eurozone Modest Economic Growth in 2016
 

Lately economy is resilience in Eurozone territory and come in contrast with a slowdown in the U.S and China.

Growth in the euro currency zone gathered pace in the first 3​ months of the year, bringing economic output back to its level ​just​ before the 2008​ financial crisis—a belated achievement that​ reflects slow path to recovery.

The strong first-quarter performance​ supported a drop in unemployment, but didn’t dispel doubts about sluggish overall growth in recent times that has left ​the eurozone grappling with chronically weak inflation, still-high​ jobless, and elevated debt.

 

The eurozone’s continuing struggle for full recovery makes other major​ economies’ recent records look sprightly—the U.S. regained its ​pre-crisis economic output level in 2011—and has fueled a debate about whether Europe is following the right mix of policies.

The eurozone’s gross domestic product grew at an annualized pace of 2.2% in the first quarter of 2016, data published by the European Union’s​statistics unit showed. That was about twice as fast in the previous quarter.

 

The solid first quarter, at a time when financial markets were​ volatile and European exports to China and other large economies​ weakened, was a welcome sign of resilience, and contrasts with a slowdown in the U.S.

However, economists expect growth to moderate in coming quarters, with many forecasting that the economy’s rate of expansion this year will remain close to the 1.6% recorded in 2015.

 

Across the developed world, concerns are mounting that economies have​ become overly reliant on easy-money policies. The calls for government action have grown louder as central banks ​reach deeper into their toolboxes, and each round of stimulus appears ​less effective than the last.

ECB President Mario Draghi has ​repeatedly urged governments to support his stimulus measures by​pressing ahead with long-promised economic overhauls, and boosting public investment in fiscally robust countries such as Germany.

The ECB has launched a series of stimulus measures since mid-2014, the most recent package in March. So far, they have had little success in raising the inflation rate, although policy makers say the eurozone would have entered a deflationary spiral had they not acted.

 

The U.S. administration would also like to see eurozone governments do more to aid the recovery. With interest rates in Europe testing negative territory even in nominal terms, there is an opportunity to expand infrastructure spending, either at the sub-national, national, or EU level.