Our overview of European GDP, debt and jobs

Date: 02-01-2014
Source: The Economist
Subject: Taking Europe’s pulse

AFTER the long freeze a slow thaw is under way for the European economy. Across the 28-strong European Union, GDP stagnated in 2013 (after falling by 0.5% in 2012) and may expand by 1.4% in 2014, according to new forecasts from the European Commission on November 5th 2013. Across the 17-strong euro area a recovery has got under way following a double-dip recession lasting 18 months, but it is a feeble one. For 2013 as a whole GDP is expected to have fallen by 0.4% (after declining by 0.6% in 2012). It will then rise by 1.1% in 2014.

As was the case in 2013, growth in 2014 will be strongest (4.1%) in Latvia, which joined the euro area on January 1st. Indeed the three Baltic states—including Lithuania outside the euro zone and Estonia within it—will be the three fastest-growing countries in the EU. But the main impetus behind the euro area’s recovery will be a combination of German growth of 1.7% together with a modest return to growth in Italy and Spain, the region’s third and fourth biggest economies. Outside the euro zone, Sweden and Britain are expected to do well in 2014, with growth of 2.8% and 2.2% respectively.

2014’s worst performers will both be in the euro area, where GDP will continue to fall in two countries. Cyprus’s woes will continue, with a further contraction, of 3.9%. And Slovenia’s GDP will slip again, by 1%. Still, this marks a big improvement on 2013 when GDP was expected to have fallen in eight countries in the euro zone and ten in the EU.

The recovery will bring little joy for the jobless. Unemployment in the euro zone is expected to stay at 12.2% in 2014. In the EU as a whole it will dip only slightly, from 11.1% 2013 to 11.0% in 2014.