Eurozone Grows Faster than Expected: End of Quantitative Easing Looming?

Written by | Friday, September 8th, 2017

The Eurozone economy grew faster over last 12 months through June this year than previously forecasted, according to the figures released by the European Central Bank (ECB). The strength of the single currency zone was one of the positive surprises for the world economy as the Eurozone’s growth outpaced the United States in the first quarter and accelerated further.

Eurostat, the EU’s statistics agency, added that the pickup had started earlier than previously thought. The agency estimates that quarter-to-quarter growth for the three months to June was stable at 0.6% and now estimates that the economy was 2.3% larger from March to May than it was in the same period a year earlier, the fastest rate of growth recorded since the first three months of 2011. Annualized, the Eurozone grew by 2.6% in the second quarter, suggesting that the economy has been growing even more rapidly than the ECB expected as it entered this year. The central bank’s economists are also expected to raise their growth forecasts for 2017 and if they do, it will be the third forecasting round in which their growth projections.

Eurostat said that the main drivers of accelerated growth were investment and exports. Investment rose rapidly following a dip after a first-quarter dip and exports aided despite the euro’s strengthening against the world’s major currencies. The unexpected growth in the Eurozone has triggered speculations that the ECB might start reducing the stimulus that it has been providing to the economy starting next year. ECB President Mario Draghi is to signal soon whether the bank will start scaling down its €2.3-trillion stimulus program, known as quantitative easing or QE.

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