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Euro-Zone Growth Pessimists Will Be Proved Wrong (Again)

Gilbert, Mark, (2017), “Euro-Zone Growth Pessimists Will Be Proved Wrong (Again)”, Bloomberg, 28 Μαρτίου

We’ve seen this movie before. Last year, the average forecast of economists was for the euro zone to post a growth rate of a bit more than 1.5 percent; instead, gross domestic product expanded by 1.7 percent. The economy displayed a similar out-performance in 2015, with an average forecast for the year of 1.4 percent outpaced by a growth rate of 2 percent.

So why does the consensus remain so pessimistic? Europe’s political backdrop is mostly to blame for making things seem bleaker than they really are. In 2015, the prospect of Greece tumbling out of the euro sparked jitters that spread to the bond markets of Italy and Spain. Last year, Britain’s vote to leave the European Union undermined confidence in the region’s economic prospects, while political rumblings in Italy cost Matteo Renzi his job as prime minister.

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