Signs of Life in the Eurozone
The latest economic data from the eurozone suggest that recovery may finally be at hand. But a more robust and sustained upturn in job creation and income growth still faces a broad array of daunting challenges.
NEW YORK – The latest economic data from the eurozone suggest that recovery may be at hand. What is driving the upturn? What obstacles does it face? And what can be done to sustain it?
The immediate causes of recovery are not difficult to discern. Last year, the eurozone was on the verge of a double-dip recession. When it recently fell into technical deflation, the European Central Bank finally pulled the trigger on aggressive easing and launched a combination of quantitative easing (including sovereign-bond purchases) and negative policy rates.
The financial impact was immediate: in anticipation of monetary easing, and after it began, the euro fell sharply, bond yields in the eurozone’s core and periphery fell to very low levels, and stock markets started to rally robustly. This, together with the sharp fall in oil prices, boosted economic growth.