Europe – United States and economic growth: what the figures say

Europe – United States and economic growth: what the figures say
Europe – United States and economic growth: what the figures say

Since 2000, the world economy has gone through several severe crises:

With each crisis, growth declines, sometimes becomes negative, then it starts again. But it is in the United States that growth restarts more quickly, in Europe it often remains at a lower level for longer.

Examination of the cumulative growth rate (in constant dollars, World Bank data) shows, over the period 2010 to 2022, generally greater economic dynamism in the United States. The cumulative growth rate is around 31% in the US, but only 21% in the EU. If certain small countries manage to compete with American dynamism, it is especially in large European countries, such as Germany, France or Italy, that the level of growth has remained lower. The differential is smaller in the case of the per capita growth rate between 2010 and 2022, but remains to the disadvantage of the euro zone.

Many reasons are given to explain the European dropout. Some are rather cyclical like Brexit or the energy crisis which mainly affects Europe. Others are more structural and risk having a more lasting impact on performance, such as lower productivity and investment in R&D, lower demographic dynamism or the absence of a large integrated capital market.

If we rely on future growth prospects, the European dropout is likely to continue, but the speed of the dropout nevertheless seems to be reducing. The OECD writes in its economic outlook published in May 2024, that “In the United States, GDP growth is expected to rise to 2.6% in 2024, before slowing to 1.8% in 2025, as the economy adjusts to high borrowing costs and moderation in domestic demand. In the euro zone, where activity stagnated in the fourth quarter of 2023, the recovery in real household incomes, tensions in labor markets and the lowering of key rates will help generate a gradual rebound. GDP growth is projected to reach 0.7% in 2024 and 1.5% in 2025.“European growth is picking up again but will always remain a little weaker than that of the United States.

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