A Summary of the Eurozone’s Economy

A Summary of the Eurozone’s Economy

The outlook remains bright in Europe as both soft and hard data remain strong. Performance in the external sector coupled with a strong domestic economy have underpinned Europe’s recovery.

Marcon’s triumph over anti-eurozone candidate in the French presidential campaign was a turning point for the European Union. Following his win, Macron laid out a reform agenda which promises increases finance and an injection of growth.

The most highly leveraged counties in the region known as PIIGS; Portugal, Ireland, Italy, Greece and Spain, are recovering after years of recessionary pressures.

Greece has obtained support from the IMF for its third bailout programme accompanied by a hefty loan to the Mediterranean country. Meanwhile, Ireland is on track to be the fastest growing country in the eurozone.

Still, risks remain; Italy’s looming election is at the forefront of investor’s concerns. The region suffers from political instability and is one of the euro’s biggest political hurdle to overcome.

Overall, Euroscepticism appears to be reducing, leaving a clearer path for the European Union.

With risks largely contained, attention has turned to the ECB’s historically loose monetary policy stance. ECB president Mario Draghi noted in July that risks to eurozone growth are largely balanced. However, did note that the bond-purchasing programme could expand in size or duration if forecasts were to turn unfavourable.

The energetic economic backdrop has provided a much more stable political stage for the eurozone. Thus, Draghi may take today’s opportunity, at the Jackson Hole symposium, to hint at a winddown of the ECB’s easy money scheme. The president could take today’s platform to indicate that there will be a rate hike for 2018.