The eurozone economic boom continues

Quickview: How long can the European Central Bank maintain its extraordinarily loose monetary policy?



Azad Zangana
Senior European Economist and Strategist

Initial estimates for GDP growth in the eurozone show another strong quarter of economic expansion. Though real GDP growth slowed slightly from 0.7% in the third quarter (revised up) to 0.6% in the fourth, the eurozone saw annual GDP growth accelerate from 1.8% in 2016 to 2.5% in 2017 – marking the fastest annual growth rate since 2007.

Encouraging growth from France and Spain

As this is the initial estimate, few details are available at this time. However, within the eurozone, France and Spain both also released flash estimates of GDP growth. France saw growth accelerate from 0.5% in the third quarter to 0.6% in the fourth, which means annual growth picked up markedly from 1.1% in 2016 to 1.9% in 2017.

Meanwhile, Spain grew by 0.7% in the fourth quarter compared to 0.8% in the previous quarter. On an annual basis, Spain enjoyed another strong year, growing by 3.1% in 2017, though this is a slight deceleration compared to 3.3% GDP growth in 2016.

Could QE be withdrawn before September?

The latest growth data supports the more hawkish comments coming from some members of the European Central Bank’s (ECB) governing council. They argue that with the economy booming and deflation risks defeated, it may be time to withdraw the extraordinary monetary stimulus in place.

The ECB’s quantitative easing (QE) programme is due to end in September; however, the risk is growing that the ECB brings QE to an end sooner, before starting to consider when to raise interest rates.

The concern amongst the committee is that a speedy exit from current policy could drive the euro higher against other major currencies, which could dent recent growth, and hamper the recovery in inflation.

Schroder Investment Management Limited - Dubai Branch is a DIFC Foreign Recognised Company. The DIFC Branch is duly authorized and regulated by the Dubai Financial Services Authority. The content of this material is not intended nor is it to be considered as financial advice and is only for the purpose of knowledge. This material has not been approved by any regulator/authority in the Middle East region. Accordingly, no regulator/authority has approved this information material or any other associated documents nor taken any steps to verify the information set out in this material and has no responsibility for it.


We have made every effort to ensure the accuracy of the information in this document. However, we cannot be held responsible for any errors, mistakes, or omissions, or for any actions taken based on this information. If you do not fully comprehend the content of this document, we recommend seeking advice from an authorized financial advisor.

This research and the information contained herein may not be reproduced, distributed, or transmitted in DIFC or in any other jurisdiction to any other person or incorporated in any way into another document or other material without our prior written consent.


Azad Zangana
Senior European Economist and Strategist


Follow us

Issued by Schroder Investment Management Limited. Authorised and regulated by the Financial Conduct Authority.

For illustrative purposes only and does not constitute a recommendation to invest in the above-mentioned security / sector / country.

© Copyright 2018  Schroder Investment Management (Europe) S.A. All rights in all countries.

Schroder Investment Management Limited – (Dubai Branch) is regulated by the Dubai Financial Services Authority (“DFSA”)