The GDP of the Eurozone in the second quarter grew by 0.6%.
The expansion is double that of the estimates released for the UK in the same quarter.
The Eurozone (officially called the Euro area) denotes to the 19 of the 28 European Union (EU) member states that have adopted the Euro as their common currency. It was established in 1999 and its GDP as of 2016 stood at $11.8 trillion.
The UK was never part of the Eurozone, having retained the Pound as its currency. It had negotiated an opt-out as part of the Maastricht Treaty of 1992. In 2016, the region voted to leave the EU altogether. Britain is currently in midst of negotiations with EU officials drafting a suitable exit roadmap.
In the first three months since the Brexit vote, the UK economy grew at a faster rate than expected. However, the trend reversed in 2017. The Office of National Statistics confirmed that UK’s GDP increased by 0.3% in the second quarter. The International Monetary Fund also lowered its projected growth-rate for UK. It now forecasts UK’s growth in 2017 will be 1.7%. Commenting on the growth, IMF said that UK’s performance so far this year has been “tepid.”
According to the data from the Eurostat, the 19 members part of the Eurozone, saw their growth accelerated by 0.6% in the three months to June. This growth is in line with what’s been forecast.
The year-on-year growth has increased to 2.1% as compared of 1.9% from the same quarter last year. This is the best number the region has seen in the past five years. Forecasts have also been bullish regarding the growth of the bloc in the near future. IMF has said that the Eurozone GDP will grow by 1.7% in 2018.
Economists are still debating on why the region is seeing robust growth. In the last 17 quarters, the Eurozone economy has grown and the unemployment rate has also dropped significantly dropped to 9.1%. Some have suggested this strong growth is due to a cyclical bounceback.
This is a reversal in fortunes between the two regions. Since the financial crisis of 2008, the UK’s growth has consistently outperformed the Eurozone.
Our assessment is that the healthy growth of the Eurozone is likely to assuage fears about the fate of the European Union upon the exit of Britain.