EUROZONE GENERAL BUSINESS SITUATION: RESULTS OF 20 YEARS

ABSTRACT

The article deals with the features of the dynamics of the Eurozone's general business situation (GBS) for the 20 years of its existence. A comparative analysis of the integration bloc GBS within the framework of two full medium-term reproduction cycles (2002-2007 and 2008-2018) is carried out using different economic indicators value added of different industries, industrial production, manufacturing production, real GDP, real GDP per capita, gross fixed capital formation (GFCF) rate, returns on GFCF rate, employment. The recession of 2020 is considered preconditioned (regardless of the COVID-19 repercussions), as the duration of the business cycle since 2008 was approaching the maximum duration of the Juglar cycle (11 years) and signs of a downturn were appearing in 2018. The feature of the second medium-term cycle is outlined - mainly recovery rather than net economic growth, which justifies identification of the Eurozone development since 2008 as the lost decade. An attempt is made to identify long waves in the development of the Eurozone GBS, possible timeframes thereof are hypothesized using GDP per capita as well as labor productivity growth rates. Period of 1996-2011 is suggested as an ascending wave, period of 2012-2019 (and later) - as a descending wave. The conclusion is made on the relatively less favorable Eurozone GBS in the second decade of the XXI century within both the second medium-term cycle and the long wave. The problem (crisis) of competitiveness of the integration bloc as a main factor of such a dynamics is outlined. In this regard a modification of the medium-term reproduction cycle in the second decade of the XXI century is revealed on the basis of the Eurozone member states GBS analysis. The modification consists in a low representativeness of industrial (and manufacturing) production index as an indicator for identifying the phases of the medium-term cycle, and in extraordinary patterns of the industry (and its manufacturing part) dynamics, which result in completion of the medium term cycle without the index reaching its pre-crisis levels in a number of Eurozone countries. This new normality calls forth to reconsider to some extent such GBS theoretical categories as cycle boundaries and peak. In conclusion, forecasts are made regarding the end of the current descending long wave in the mid-2020s and possible GBS improvement within the medium-term cycle in this period subject to reasonable economic policy aimed at tackling the Eurozone competitiveness crisis.