The Eurozone was particularly hard-hit by the Global Financial Crisis in that it acted as the trigger for the bursting of property bubbles, notably in Spain and Ireland. This, coupled with the revelation that Greece had lied when it claimed to have met the convergence criteria when joining the Euro at the outset and that it had seriously underestimated its debt, led to the region-specific Sovereign Debt Crisis. The Sovereign Debt Crisis led to Greece, Ireland, Portugal, Spain and Cyprus to require support from the IMF and or EU in sovereign or partial bailouts (Spain needed support for its banking sector). Coupled to the largest economic recession the world has seen since the Great Depression followed by an unusually weak economic recovery around the world which left demand for goods and services muted, the Eurozone has still a long way to go before the economic recovery reaches the pre-crisis level.
Mario Draghi, President of the ECB expects the Eurozone economy recovery to deepen over the course of the year and for inflation to remain low, but positive at 0.3% (up from an earlier prediction of 0%). The ECB left its key interest rate unchanged at 0.05%. The ECB is pleased with the functioning of its QE measures which started in March and are due to run until September of 2016.
Unemployment within the 19 member bloc edged downwards in April from an average of 11.2% to 11.1%, but notable black spots remain in Spain and Greece, of course.
The OECD now expects stronger growth within the Eurozone this year, edging their prediction up from 1.1 to 1.4% growth. For its part, the ECB expects that the Eurozone economy will grow by 1.5% this year. With no hard news of a deal between Greece and its major creditors and time clearly running out, nobody is willing to quantify the economic impact of a “Grexit” on the economic fortunes of the bloc, however.