Eurozone Revival

The eurozone revival became the surprise economic story of 2017, as years of monetary stimulus finally paved the way to steady growth. Though far from over, the eurozone’s economic recovery is deepening, prompting the European Central Bank (ECB) to begin the long process of policy normalization. Eurozone economic activity shifted into high gear in 2017, with GDP expanding by at least 0.6% through the first three quarters. Regional growth outpaced the United States for the first time since the 2008 financial crisis and the U.K. for the first time since 2011. The euro area’s resurgence has impacted everything from trade and consumption to equities and real estate. It has also supported a broad pickup in inflation, although consumer price appreciation remains well below the ECB’s target. Unemployment in the region has also fallen to the lowest level since 2009, a sign that peripheral states were finally turning their fortunes around. Markets also capitalized on renewed certainty that regional governments would remain committed to the pan-European project. This was more or less solidified after the Dutch, French and German elections, in which populist movements broke ground but failed to form government.