12 years with EURO: no economic effects – FBK’s overview

Eurozone established in 1999 doesn’t provide any considerable economic benefits for its member countries. That was the conclusion FBK experts made having reviewed dynamics of a number of macroeconomic showings of Eurozone countries.

“Europe debt crisis became Eurozone crisis. All that just a couple of months ago seemed to be absolutely unrealistic – dissolution of Eurozone – becomes a rather probable scenario today”, tells Director of FBK Strategic Analysis Department, Igor Nikolaev. “This is why when answering the question whether establishment of Eurozone had positive impact on European economy, politicians, economists and citizens of EU countries are actually answering the question about the future of single currency”.

According to FBK calculations average annual GDP growth in Eurozone countries in 1992-1998 (i.e. before the Eurozone was established) was 1,8%, while in 1999 – 2010 it was 1,5%. Average annual GDP growth in 1999 – 2008 (i.e. before the global economic crisis), of course, was higher – 2,1%. “However anyway, dynamics of the principle macroeconomic showing – GDP, does not show any positive effects from establishing Eurozone”, Igor Nikolaev states. According to Igor Nikolaev, tempos of growth of industrial production demonstrate similar dynamics. Average annual showing in 1991 – 1998 was 1,2%, while in 1999 – 2010 – 0,7% (in 1999 – 2008 – 1,7%).

According to FBK experts, exceptionally indicative are the showings of growth of export and import. If in 1990 – 1998 average annual export showing was 6,5%, in 1999 – 2008 (i.e. not considering the crisis) it was – 5,4%. Import showings were 5,9% and 5,2% correspondingly. “So, no activation of export and import transactions, because of establishing Eurozone, happened. On the whole, a rather unlikely conclusion suggests itself: expectations that through liquidation of fluctuation of exchange rates and US dollar losing its dominant position etc. it will become possible to improve economic dynamics of Eurozone countries, failed”, Igor Nikolaev sums up.

According to him, it is important to consider this conclusion when seeking the ways out of crisis for Eurozone countries. “Maybe the dissolution of Eurozone and return of national currencies is no great tragedy, as we can see it so far”, the expert believes.