Last week, the 19-nation eurozone reported revised Q1 2016 GDP growth, which showed growth ticked down from the preliminary estimate of 0.6% q/q (2.2% annualized) to 0.5% q/q (2.1% annualized). The media reaction, as it is with most things including the words "eurozone" and "economy," was dour. Some bemoaned that only now had the eurozone "scraped" back to pre-crisis GDP levels. Others suggest this uptick is likely fleeting and too reliant on Germany. Others claim the eurozone crisis is just on pause. Still others remain fixated on the fact eurozone CPI was in negative territory in April, fretting a deflationary spiral looms. But a negative take on a growing eurozone is really nothing new. So let's look at the data and assess whether there is really so much to be dour about.
Here are a few quick factoids and charts:
Exhibit 1: Eurozone GDP at an All-Time High
Source: FactSet, as of 5/17/2016.
Exhibit 2: Eurozone Country-by-Country GDP Growth (Quarter-Over-Quarter)
Source: Eurostat, as of 5/17/2016.
Exhibit 3: Eurozone GDP Growth and Harmonized CPI
Source: FactSet, as of 5/17/2016, GDP and harmonized CPI from 1/31/2012- 3/31/2016.
Exhibit 4: Eurozone Nonfinancial Corporate Loan Growth
Source: FactSet, as of 5/17/2016, from 1/31/2012- 3/31/2016.
Far be it from us to suggest the eurozone is going to lead growth looking forward and everything is hunky-dory. That is not our point now, nor has it been at any time in recent history. Our point is that the narrative of the eurozone being a crisis waiting to happen is pretty darn far removed from the data at this point.
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