A raft of positive statistics for the eurozone has been released.
We learned from the EU’s statistical office Eurostat that economic growth is accelerating faster than in the United States, unemployment is at a more than seven-year low and inflation has risen to just below the European Central Bank’s target.
For the final three months of last year gross domestic product in the 19 countries using the euro rose 0.5 percent from the previous quarter and it was up 1.8 percent from a year earlier.
The quarter-on-quarter growth would mean an annualised rate of 2.0 percent, higher than the 1.9 percent annualised rate reported for the US economy, the world’s biggest.
The economic recovery is gathering speed from the continuing massive stimulus programme from the European Central Bank, which is aimed at boosting bank lending.
That has also had the effect of weakening the value of the euro, driving up exports.
Stronger economic growth helped bring down the euro area’s unemployment rate.
In December the total number of people out of work slipped to 9.6 percent of the workforce – the lowest level since before the eurozone-wide debt crisis nearly eight years ago.
However, the picture is still very mixed from county to country with Germany at another post-reunification low, some improvement in France and Spain, but the situation in Italy worsening.
Joblessness has been one of the region’s biggest problems, leading to demands for labour market reforms.
Inflation accelerated to 1.8 percent year-on-year in January. But core inflation, which excludes volatile prices of energy and unprocessed food, was stable at 0.9 percent.
Given that high headline figure, which is near the European Central Bank’s medium-term target of below but close to two percent, the ECB will inevitably come under renewed pressure – particularly from Germany – to raise interest rates and back off its generous stimulus programme.
ECB President Mario Draghi has said he will look past energy price fluctuations until underlying inflation picks up in a “convincing” way.
One of Draghi’s rate-setting colleagues, Ewald Nowotny, has also pretty much shut down any move soon, particularly on reducing its asset-buying programme which pumps new money into the region’s economy.
“With core inflation still weak, it seems unlikely that this will cause the ECB to change course” on its bond-buying programme, said Bert Colijn, economist at bank ING.