The European Banking Federation’s Committee of Economists estimates that the euro area will continue its economic recovery, underpinned by three key factors: an expansionary monetary policy, an increasingly solid and dynamic labour market, and a more optimistic global environment. In this context, euro area GDP growth could reach 1.8% in 2017 and a similar pace in 2018. This growth could be higher were it not for the high political uncertainty and geopolitical tensions currently shaping the global economy.
Private consumption is consolidating as the engine of growth in Europe, supported by improving employment figures and very favourable financial conditions. Meanwhile, gross fixed capital formation will also improve strongly due to favourable financial conditions, the need to modernise the capital stock, and the strength of corporate results. Not to mention the stability brought about by Emmanuel Macron’s victory in France, which has not only dispelled any hint of risk but will likely strengthen European integration. The stability of economic growth in most emerging countries and the solid pace of growth recorded in the more developed countries should reinforce the dynamism of European exports to the rest of the world.
There is broad consensus that economic growth will be sufficiently robust to ensure that the labour market continues to improve over the projected period. Thus, unemployment could fall to 9.5% in 2017 and stand close to 9% in 2018. The latter would be the lowest unemployment rate in the last decade. However, these figures mask the fact that there is a wide disparity in unemployment rates across the euro area. In Spain, despite continuing to generate a high level of employment, the unemployment rate will still be close to 15% at the end of 2018.
