After a record, 18 months of economic shrinkage, the Eurozone has finally come out of recession. The 17-country zone’s GDP expanded by 0.3% during the second quarter of this year.
Growth was slightly more than experts had expected.
The Wall St. Journal wrote that the majority of economists say the recovery is “too sluggish to overcome the deep problems ailing the euro zone any time soon, including mass unemployment, rising debts, sick banks and fraying politics.”
The Eurozone consists of 17 countries that use the Euro as their currency. The European Union, on the other hand, is made up of 28 countries.
Germany, the largest economy in the Eurozone, grew by 0.7% during the second quarter. France saw 0.5% growth, and Portugal 1.1%.
Eurozone still not a uniform economic block
However, it is becoming clear that not all the countries in the Eurozone are following the same economic cycles.
The Spanish economy shrank by 0.1% during the last quarter, while the Netherland’s and Italy’s GDPs went down by 0.2%.
Olli Rehn, Vice-President of the European Commission, said:
“There are still substantial obstacles to overcome: the growth figures remain low and the tentative signs of growth are still fragile. A number of member states still have unacceptably high unemployment rates; the implementation of essential, but difficult reforms across the EU is still in its early stages. So there is still a very long way to go.”
The European Central Bank (ECB) has reduced interest rates to a record low.
ECB President, Mario Draghi, says interest rates will stay down for an extended period to help expand the Eurozone economies.
Mr. Draghi described that latest economic progress as “tentative”.
The ECB has predicted a 0.6 economic shrinkage for the Eurozone for this year.
In an interview with Bloomberg TV, Stephen King, from HSBC Holdings PLC, London, said:
“The growth rates we’re currently seeing are still far too low and we’re seeing an increasing gap between financial and political hope on the one side and economic reality on the other. The problem is the gap between the growth that’s being delivered and the growth that’s required to make the fiscal numbers add up in the medium term.”