According to Eurostat, average growth amongst the 19 member states which use the Euro, the Eurozone, picked up in Q1 2016 to 0.6% (under a tenth of the expansion claimed for China, it should be noted). The figure came in above expectations as analysts had been anticipating a modest rise over the Q4 2015 expansion rate from 0.3 to 0.4% - in the event, the rate of expansion doubled. This data suggests that the Eurozone economy has now finally expanded beyond the size it was at the outset of the Global Financial Crisis: alternatively, it can be stated that the Global Financial Crisis cost the Eurozone eight years’ worth of growth.
Those who worry about such things will be unnerved to discover that the Eurozone slipped back into deflation in April with prices easing by 0.2% over the March level which itself was unchanged (i.e. zero percent inflation) over the February figure. Those concerned about deflation fear that falling prices could further stymy demand within the Eurozone as canny consumers put of purchases to a future date when the goods they want will be cheaper. In my view, this is a greatly exaggerated concern since EU consumers have always taken advantage of credit to buy goods they can’t actually afford now, rather than saving for them – this won’t be changed by marginally falling prices.
In addition, the Eurozone deflation was fuelled (sorry) by a decline in the cost of energy prices which fell by 8.6% over the year to March and food costs also fell by 1.2%. If these figures are stripped from the data then the underlying inflation rate would have been a modest 0.8%. The figure is well below the 2% level declared to be optimum for growth by the ECB.
Another ray of economic sunshine for the bloc is that unemployment has fallen to a four-and-a-half years low of 10.2%, but unemployment within the bloc remains very heterogeneous.