EU Economy Brief 36/2017

Numbers of the Week

  • Outlook for euro-area GDP growth in 2017 received upward revision to 2.2%, compared to 1.9% in a June forecast. The projection for 2018 and 2019 remained unchanged at 1.8% and 1.7%, respectively. At the same time, the ECB dimmed its inflation outlook for the next two years to 1.2% (1.3%) and 1.5% (1.6%), falling short of the policy target of just below 2%. (ECB)
  • The euro appreciated 1.3% versus the US dollar since Wednesday, peaking at $1.207 on Friday morning. The ECB’s announcement to set out plans in October how to end its €60bn-a-month QE program sent the euro exchange rate to its highest level since January 2015. (FT, Onvista)
  • Real wages in the EU are expected to grow by 0.4% in 2017, compared to 1.5% in 2016. The slowdown is mainly driven by higher inflation rates as nominal wage growth is projected to climb from 1.7% in 2016 to 2.2% in 2017. While real wages are expected to grow fastest in Eastern Europe, 6 EU countries might see real wages fall in 2017, among them Spain and Italy. (WSI)
  • Swedish GDP growth projection for 2017 revised upward to 3.2%, compared to 2.2% in a July forecast. The outlook for 2018 also improved from 2.4% to 2.7%. Despite upgraded growth and inflation forecasts, the Swedish central bank keeps its base interest rate exceptionally low at -0.5% in order to prevent the krona from a faster appreciation. (Swedish Riksbank)

Chart of the Week­

Within the euro area, EU citizens still head to the centre, but the South is slowly catching up

  • Net arrivals of EU-28 citizens in core countries for work, studies or retirement reached a new peak of 420.000 people in 2015. Periphery countries reversed the negative trend and registered a net influx of 36.000.
  • Germany is by far the most popular destination within the euro area, counting around 320.000 net arrivals in 2015. Austria, with around 41.000 net arrivals, has the highest intake per capita. Until the crisis, Spain was the most popular country for intra-EU migrants, with a record of 365.000 net arrivals in 2007.
  • The most mobile Europeans are from Eastern Europe. Romanians and Latvians top the list of EU-citizens of working age on the move, with 16% and 13% respectively currently living abroad.
  • Labour mobility is crucial for the euro area. Within a currency union, a high labour mobility can help alleviate macro-economic imbalances by mitigating asymmetric shocks. In comparison with the US, labour mobility in the EU remains low (2.35% vs. 0.35% annual cross-border mobility, 2014).

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