EU Records Highest Economic Growth in 10 years
By Georgi Ninov - Research Analyst
In macroeconomic terms, 2017 was certainly a year of optimism for the EU, as the Union recorded a 2.4% annual GDP growth, its best performance since 2007. A 2.6% increase in the October-December quarter also meant that the EU has been growing for 19 consecutive trimesters since Q1 2013. The Eurozone performed similarly, growing 2.7% year-over-year and 0.6% quarter-over-quarter. Last year marks the first time in ten years when all EU countries have grown on aggregate at the end of the year, and the first time since 2006 when no country had decrease in quarterly GDP during the year.
At 7.8%, Ireland is the fastest growing EU economy for 2017, continuing the trend from 2014 onward. Romania and Malta follow, with 7% and 6.6% respectively, and Latvia, Estonia and Slovenia are also among the front-runners. Q4 2017 has shown positive developments for the Czech Republic (5.2%) and Hungary (4.9%) as well.
Among the top 5 EU economies, Spain had the strongest growth for 2017 at 3.1% while EU’s powerhouse Germany performed close to the average for the Union (2.5%). The other big three – UK, Italy and France increased under the 2% mark, although the second half of the year saw France closing to the EU average. At 1.7%, UK's performance was the weakest in the last five years and the country is struggling to catch up with the major economies while preparing to leave the EU. Conversely, Italy's GDP increased by 1.5%, its best in five years. However recent elections, contributed to the political uncertainty that has been plaguing the biggest Southern European economy in the past years.
Regarding the economic outlook for 2018, the growth momentum is expected to be sustained with the European Commission assessing both the EU and Eurozone growth to be around 2.3% and 2% in 2018 and 2019 respectively. Low unemployment, high economic sentiment and strong investment are anticipated to boost the performance of the European economy, while political uncertainty (as in the case of Italy or the Brexit negotiations) remains the most troubling issue regarding growth.