Five years after the financial crisis, some economists and politicians are heralding an end to the euro zone’s economic doom. Based on a handful of recently published economic indicators, they predict the region could return to positive economic growth as early as this quarter.
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But it’s worth noting that even if that happens, the euro zone economy will still be worse off than it was in 2009.
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Why? GDP alone (the total of consumption, investment, government spending, and net exports) is a poor indicator of economic health. Even though the region’s GDP has only fallen about 3% from its pre-crisis high, investors have recoiled from heavily indebted European economies, fearing that some European governments would not be able to make good on their obligations, which has contributed to record high unemployment levels.