COLUMNISTS Could the eurozone’s astonishingly robust economic performance during the second quarter be for real? France is now the eurozone’s growth locomotive. Its economy expanded at an annualised rate of between 4.5 per cent and 4.9 per cent. Germany’s performance is not as strong but in some respects more astonishing. With an annualised growth rate of 3.6 per cent, it would be wrong to classify Germany as the “sick man of Europe” – an honorary title it inherited from the UK. One economist has been talking about a “Goldilocks” scenario for the eurozone – neither too hot, nor too cold. Is this optimism justified?
One way of answering this question is to compare the present to previous upturns. I looked at quarterly Datastream figures for German and French gross domestic product since the mid-1980s and identified periods during which both economies expanded at above-trend growth rates. I defined a boom period as when quarterly GDP growth rates remained above-trend for at least four quarters. There is some arbitrariness in such a calculation. Current trend growth may be higher or lower than we think. Also, since quarterly data are often erratic for statistical reasons, I had to allow for a single quarter of below-trend performance in my calculations.
