Euro area is back on the brink of recession

Given China has seen lowest growth in almost 30 years and the US where some positive numbers are hiding some negative stories, it would seem that there is a wider context to take into consideration. The article seems loaded with the premise of the Euro is bad but taking the wider global context, this premise seems flimsy. Dont get me wrong, the Euro has proven to be a great way of legally devaluing german currency and the opposite to southern med countries but my issue is the finger being pointed at something when there is almost certainly a bigger picture to be considered.

A headline in search of an article.

Very little context provided, would have probably been served even better with just a graph of the euro zone growth from 1999 quarter by quarter versus other economies like Japan, US, China for context.

Journalism feels lazier and lazier as it constantly searches for more clicks and ad impressions.

The Economist has historically been a big supporter of the EU and globalization. Something has shifted in their perspective. They were also pretty downbeat about the EU's prospects while discussing the Aachen Treaty between France and Germany that was signed yesterday. https://www.economist.com/leaders/2019/01/17/france-and-germ...

A huge issue is the stagnating population growth in European countries. Over the last 10 years Germany, Italy, Spain have only barely risen in population. Of course that means lots more retirees and fewer workers. Maybe flat economy is actually a good outcome as can be expected.

One of my favorite stats is that 100 years ago the population of Europe was nearly 30% of the world's total. Now its <10% and falling quickly.

Finally Yes I dont think its necessarily a bad thing, but you can't expect strong economic growth will falling working age population.

Since 2007 - broadly the great recession time frame forward - Lithuania has had by far the best GDP per capita growth among Euro members at nearly 40% (nominal, USD terms). Estonia is second, at around 19-20%. Latvia is third at about 11%. Slovakia is up 10%.

A distant fifth is Germany at around 7%. Ireland is up a couple percent.

Everyone else in the Eurozone is either near flat or negative on growth over the last ~11-12 years.

Greece is down 35%, Italy is down 15%, Spain is down 14%, Portugal is down 7%, France is down 7%, Finland and the Netherlands are down about 5%.

While the article is criticizing the Euro, Denmark and Sweden have also seen essentially zero per capita growth since 2007. The UK is down 20% over that time.

Outside that group and the Euro, you've got Romania up 30%, Poland up around 23%, Czech up 11% and Russia up 18%. I've excluded Norway, just because their figures swing wildly with oil.

There's definitely a sustained, serious growth problem in most of the Eurozone, however the baltics are doing quite well. The Netherlands, Belgium, Ireland, Finland, Germany and Austria are starting from quite high per capita figures, it's not a trivial task to keep pushing those higher.

The real issue isn't growth generally, it's that the next slide backwards in terms of recession, is going to badly damage the bunch that hasn't held their ground or seen enough recovery yet: France, Italy, Spain, Portugal, Greece. I'm not sure how the Euro survives if those sink lower in a recession and see another lost decade. Which would then actually be a lost two decades - a 1/3 to 1/2 real contraction for all of them, inflation adjusted over time. Losing that much of your purchasing power over 20 years is brutal, people won't sit idly by and absorb that forever, they'll rebel against the institutions.

France has pretty considerable exports, equivalent to nearly 20% of their GDP (the US is closer to 11% by comparison). If I'm them, I'd be seriously contemplating that I'd be better off controlling my own currency, so as to undercut the Germany export juggernaut rather than suffer from a currency that is too expensive (while simultaneously being artificially cheap for the German economy, spurring their exports and trade imbalance). Spain, Italy, Portual and Greece are all similarly suffering from a Euro that is too expensive for their situations (to varying degrees) and is harming their export potential.

Things are not looking promising and 2019 is European elections year. Greece has financial and many other issues, Italy has also many financial and internal issues, Germany is not holding the same powerful position as it had with Merkel, UK is uncertain with one foot in the EU, France has already a lot of problems and many more coming up and the same goes for other countries (immigration, politics, economy...). Let’s see how things play out.

This article seems to ignore Northern and Eastern Europe which are booming. Italy is not the whole Europe. Compare it to US where different states have different performance at different times.

That I think is the saving grace of Brexit. Investor confidence in Italian public debt will evaporate sooner or later, and I don’t see Germany allowing and paying for a bailout of Italy, given how they reacted to the bailout of Greece. The UK will likely look like a safe heaven for capitals when that happens.

I didn't know Theresa May wrote for The Economist. /s

And to think the comission was making speeches just a few months ago touting a faster than US growth rate.

Common currency without a common monetary policy, who would have thunk that this was a bad idea?

We can always just keep siphoning cash from US multinationals thru bogus antitrust claims. That's one way to stay afloat in the face of demographic crisis, stagnant productivity, and Chinese takeover of key sectors.