Europe may be poised for a golden decade of economic expansion

Posted by Oxford Economics on Nov 20, 2017 12:14:14 PM

Lost amid Europe’s political drama and recurrent euro doomsday scenarios is the fact that the Eurozone economy has a business cycle that is alive and well.

Our analysis suggests there is plenty of room left in the current expansionary cycle, which could see the single currency area enjoy a golden decade of economic growth. 

More than four years into the current upturn, most indicators signal the Eurozone economy is still somewhere around mid-cycle, suggesting that – absent an unexpected shock – we should see several more years of sustained expansion. 

One reason is that the amount of economic slack in the Eurozone countries –  the size of the “output gap” before an economy hits a ‘speed limit’ above which growth comes with inflation – may be larger than commonly accepted. 

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Topics: Global Economic Model, Business and economic outlook, Europe, Eurozone, Euroboom, ECB, Draghi

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