The European Central Bank has revised its projection for growth of the 19 member Eurozone block upwards. The news comes as the ECB embarks on its quantitative easing programme which will run until September of next year, or longer if needed, and will see €1.1 trillion of asset purchases. It expects to purchase €60 billion per month whist the programme runs. The ECB is now predicting that growth this year will come in at 1.5% up from a previous projection of 1%. To put this in perspective, the GDP of the Eurozone is worth something like €13 trillion, so an additional 0.5% of growth works out at an increase of €65 billion. The Eurozone economy surpassed the US economy in size in 2012 according to Eurostat – US GDP is worth $16.8 trillion. However, the decline in the value of the Euro relative to the Dollar probably means that this statement is no longer true.
According to the latest projections, ECB President, Mario Draghi, is expecting Eurozone growth to rise to 2.1% in 2017. In his presentation, he also indicated that the bank expects low, negative inflation (erm, deflation) to persist for most of the year before inflation returns towards year’s end. The bank thinks that inflation will be at 1.8% in 2017; this may suggest that ECB interest rates are unlikely to rise before then since this figure is still below the ECB target inflation figure of 2%. Given this, it was unsurprising that the ECB interest rate has remained unchanged at 0.05% following the ECB interest rate meeting. The bloc managed to expand in Q4 of 2014, with growth of 0.3% beating projections from economic analysts.