The euro area is back on the brink of recession

IT BEGAN AS a joke: the Twitter hashtag #euroboom tacked on to news of any sign, no matter how faint, of a euro-area recovery. By 2017, when French, German and even Spanish GDP grew by more than 2%, it seemed to describe a real phenomenon. Alas, all too quickly #euroboom has turned to #eurogloom. GDP data scheduled for release later this month are likely to confirm that in the final three months of 2018 Italy’s economy contracted for a second consecutive quarter, satisfying one of the technical definitions of a recession. Germany appears to have escaped recession, but only just. The euro area, formed in January 1999, may pass its anniversary on the brink of another downturn.

The euro has been an economic fiasco. GDP growth in the euro area has lagged behind that in other advanced economies, and in the European Union as a whole, throughout its life—before the financial crisis, during the global recession and its euro-area encore, and even during the recent #euroboom. Perhaps the area would have done as badly without the single currency. But attempts to estimate euro-zone performance relative to a counterfactual world sans euro suggest not. The past decade has been especially brutal. A list of the world’s worst performers in terms of real GDP per person since 2008 contains places suffering geopolitical meltdowns—plus the euro-area periphery. Greece has been outgrown by Sudan and Ukraine. Cyprus and Italy have been beaten by Brazil and Iran; France and the Netherlands by Britain.