The eurozone has continued a slow but steady recovery, growing by 0.4 percent in the first quarter of 2015 (or 1.6 percent on an annualized basis). This is its fastest growth rate since 2013. While hardly as robust as say, Mongolia (whose economy grew by 7.8 percent last year), it is a sign that the doom and gloom predictions for the currency and the related political and economic union may have been premature. How long can the eurozone sustain this modest momentum?

Much has been made about the 19-member eurozone’s troubles in recent years, particularly the strain the PIIGS nations (Portugal, Ireland, Italy, Spain, and most notably, Greece) have put on the shared currency. But for the first time in five years, the four largest eurozone economies (Germany, France, Italy, and Spain) all grew. Spain took the lead with 0.9 percent growth in the first quarter of 2015. And perhaps more interestingly, the eurozone’s growth outpaced that of both the United Kingdom and the United States.

Germany, the eurozone’s largest economy, saw lower-than-expected economic growth at just 0.3 percent, which would normally be a cause for concern. However, France and Italy seem to be making up the difference. France, the second-largest eurozone economy, grew at its fastest rate since 2013. And Italy’s gross domestic product (GDP), which was stagnant in the last quarter of 2014, grew by 0.3 percent. Together, France and Italy account for 40 percent of the zone’s GDP.

French Momentum

The French economy grew by 0.6 percent in the first quarter of 2015. While that might not seem like much, it is higher than the 0.4 percent predicted, and it continues to strengthen, according to the National Institute of Statistics and Economic Studies (Institut National de la Statistique et des Études Économiques or INSEE). Industrial production and household consumption are on the rise, with the latest figures showing the largest growth in four and six years, respectively. And in a recent survey by INSEE, France’s manufacturers forecast an increase in investment of 7 percent this year, despite a decline in total investment of 0.2 percent in the first quarter. The European Commission estimates 2015 growth for France at 1.1 percent and Michel Sapin, France’s finance minister, optimistically estimated that in 2016 the country would continue to grow by 1.5 percent.

The growth in the zone overall, and in France and Italy in particular, is attributed to a combination of a significant drop in oil prices, a weakened euro, and the European Central Bank’s (ECB) recently expanded monetary stimulus program. Earlier this year, the ECB announced an aggressive bond buying program, through which it will buy up to €60 billion (roughly $68 billion) of private and public sector bonds each month.

ECB President Mario Draghi said that the quantitative easing policy would continue until inflation reaches two percent or until September 2016. With such a specific date and goal, the policy is now built into analyst and investor expectations for the eurozone.

Some observers worry that when the ECB stops its quantitative easing program, the region’s economies may slow down again, particularly if some of the countries do not practice what they preach (i.e., create more competitive environments and curb spending). Some neighboring lawmakers are asking France and Italy to push through more economic reforms to continue their growth and help drive the zone, which has often depended on Germany.

According to the Wall Street Journal, business confidence in France and Italy is at its highest level in years. However, a recent survey of business heads found that 70 percent were still wary of hiring in France, despite some recent labor reforms. As an indication, France’s unemployment rolls increased to 10.6 percent in March 2015 up from 10.1 percent a year ago. Unemployment in the eurozone stands at 11.3 percent, with the lowest rate in Germany (4.7 percent) and the highest in Spain (23 percent) and Greece (25.7 percent), according to Eurostat figures released in March 2015.

Finland and Greece: The Holdouts

And while news was positive for the eurozone overall, Finland and Greece’s economies both contracted for a second consecutive quarter, which means that both of these economies are technically in a recession. This is hardly earth shattering news for Greece, which had only recently climbed out of five years of recession. Finland, however, has a reputation for being pro-austerity. As recently as May 8, 2015, Timo Soini, the leader of the Finns Party (which are part of the planned ruling coalition), said "The crisis has not alleviated ... and something must be done about it,” indicating that the best option would be for Greece to leave the zone.

The European sovereign debt crisis that began in 2009 as countries were unable to repay their sovereign debt or to assist over-extended banks hit Greece the hardest. Greece’s debt and deficit figures led to a crisis of confidence. Greek sovereign debt was downgraded to junk status by credit rating agencies in 2010, which plunged the economy further into crisis. The Greek government agreed to austerity measures that were conditions for bailout packages from member eurozone countries, the ECB, and the International Monetary Fund.

In January 2015, a new Greek government refused to accept the terms of its current bailout package, and the lenders suspended remaining aid. As talk of a Greek exit from the European Union and eurozone became louder, however, the Greek government entered into negotiations and the suspension was temporarily lifted. Many analysts believe that Greece will need another round of support when the current package runs out in July 2015. In recent months, Greece’s economy has slowed in part because of these austerity measures, a continued wariness over Greece’s commitment to them, and a growing cash crisis. It does not help when the country’s finance minister says he wishes Greece still used the drachma, as he did in May 2015.

Finland, on the other hand, has been hurt by international sanctions imposed on one of its largest trading partners, Russia, and the continued impact of Nokia’s (NOK) downturn. (Nokia accounted for 2.6 percent and 1.6 percent of the country’s GDP in 2008 and 2009 respectively.) And in mid-May, Finland was the only member country to get a warning from the European Commission about the country’s deficit. Under EU rules, a country’s budget deficit must be below three percent and it debt to GDP needs to be under 60 percent.

Now Finland faces a possible disciplinary action called an “excessive deficit procedure.” Under the procedure’s provisions, if a member state does not comply with recommendations to reduce the deficit, it could face penalties or fines. "It would be a very serious message. At the moment, we have no economic growth, the employment situation is weak and we have the budget deficit," said outgoing Finnish Prime Minister Alexander Stubb.

The Bottom Line

The eurozone economies are growing overall, with France and Italy gaining the most steam. The most recent economic data show some positive trends in the largest economies and are helping to dispel fears of a collapse of the euro. While it appears most countries in the eurozone have come out the other side of the debt crisis, there are lingering issues that may hinder long-term economic growth for the region, most notably the strain of a Greek standoff with its creditors and Finland’s deficit issues.

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