What is the Economic Growth of European Countries?


The European countries are integrated into one economic and political bloc under European Union consisting of 28 countries. There is a marked improvement in the integration owing to the successful economic activities that have taken place within the respective countries. One of the key aims of the Union was to promote a harmonious market through allowing free movement of people, goods and services among the member states. The success of any economy is usually measured in terms of how much successful economic activities have taken place. In addition, there are diverse facets that can be used to assess the growth level of any given economy. Such indicators include; the rate of employment, GDP, among others.

Aim & Objectives

To assess if there is significant economic growth among the European countries.

To identify the reasons behind the growth or retardation in economy among the European countries.

To identify if there are any economic problems and challenges in the European countries.

To offer recommendations that can assist to catapult economic growth among European countries.

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Literature Review

According to, European Union has established itself as one of the strongest and fast growing organizations, and consequently, the respective countries. It has been known as one of the fastest growing economic bloc. With approximately 7.3% of the world’s population, 500 million people, it accounts for almost 23% of world’s GDP.

There are many factors that have contributed towards the swift and fast growth of the European countries. The removal of non-tariff barriers and free trade is one factor that accelerated the growth in the European countries. This is because; the processes have acted to reduce the costs of production and consequently the costs that are imposed on the consumers. With the removal of the aforementioned barriers, the region has witnessed increased trading activities, a step that has increased the income and has resulted to the creation of more job opportunities, resulting in increased economic growth.

Contrary, there have been a lot of challenges that have been experienced among the member states, which has resulted in the deterioration of the economic conditions of the European Union. Countries that have been highly affected by the economic crisis that started in 2007 include Italy, Spain, Portugal and Greece. As a result, over the decade, there has been a significant deterioration of social issues and conditions, very low economic growth and high unemployment rates within the European countries.

One of the challenges affecting the European countries is the unemployment rates. The unemployment rates within the European countries are very critical. For instance, in a Spain, it is suspected to be around 25%. Specifically, the unemployment rates among the youth are approximately 50%. One of the factors determined to have caused the great unemployment rates is the great and the prolonged recession. Furthermore, there is the challenge of the long term structural unemployment. The graph shown below represents the unemployment rates of The European union from 2002 to 2012.

The European countries have also faced a major blow resulting from extended fall in the gross domestic product (GDP).  The problem of recession started in the 1930’s and since then the economic growth of the European countries has not been able to rise up to the expected standards.  Another contributing factor is the weakened world economy. As a result, the economy of most of the European countries has surged into recession. There are many fiscal and monetary policies that have worked to contribute towards the declining economic situation of the European countries.  Presence of structural problems over a period of time has worked to create a trend of declining economic growth within the European countries.

The problem of competitiveness has also affected economic growth of the European countries. For instance, the Euro has made the competition to escalate among the different countries.  For example, there are countries whose labour costs are higher than the others. In this case, it becomes difficult for them to compete with other countries.  The prices of products and services have also been indeterminate over a long period of time. Therefore, there has been a lower demand from the domestic market and high deficits from the current accounts. These factors have worked to drag the economic growth of the European countries.  In countries such as Spain and Ireland, there has been a trend of falling in the deficits of the current accounts since 2011. Many countries within the region have also witnessed an upsurge in the unemployment rates.  Since many countries thought that they would be able to regain competitive advantage through internal devaluation, the process has worked to cause much more harm than the perceived benefits. 

Demographic labour changes in countries like Italy and Germany has caused a lot of changes within the economies. For instance, there have been consistent declining birth rates while the number of people aged above 50 years has been increasing at the same time.  As a result, there has been a serious decline in the revenue collected by the government authority.  This tends to create a serious burden on the government spending since it has to depend on borrowing money.  The public debts have been escalating with time. Italy for example had a public debt amounting to 105% in 2006.  France and Germany’s debt at the time stood slightly less than 70%.  The high levels of debts are an indirect cause of declining or weakening of economies. 


Figure 1: General Demographic data for European countries

The population data for the young, working age and the old age can be used to determine the level of the economic development of any region or country.  The figure above shows the demographic pyramid for the European region. From the pyramid, it can be ascertained that there are fewer young people at the bottom, many young and working population and also fewer old people at the top of the pyramid. The figure shows that many are in the working class while the dependent population are a bit fewer.  From the pyramid, which compares the population trend between the year 1994 and 2014, it is evident that there are fewer people who are being born within the region which puts the European region at economic risk. This is because; the future working population is comprised by the fact that there are few people that are being born.  From the data presented in the pyramid, it is expected that the economic growth of the European countries is expected to generally decline in the future following the trend of the reduced birth rates. 


Table1:  Comparison of GDP growth forecasts for the Euro area

The above table shows the comparison of data produced by the three centres with regards to the GDP growth in European countries.  From the data, it can be determined that there has been a general rising trend in the growth of GDP among the European countries, which shows a positive trend in the economic growth of the respective countries that make up the European countries. However, the trend shows minimal changes as compared to the expected changes within the region that can be said to be fast growing. 


Figure 2: The Unemployment Rates in European Region 

The above figure shows the unemployment levels for the population in the European countries. From the figure, it is evident that the unemployment rate was minimum in 2008 and has continued to escalate since them with the highest value being seen in 2014. Unemployment levels or rates are an indication of declining economic growth. The economic growth of the region has therefore been declining with time from 2008 to 2014. However, since the unemployment rate has been declining after 2014, it shows that the economic growth is promising and the region may witness unprecedented growth following the declining rates of employment.


The present research used three major indicators to assess the economic growth of the European countries. These factors include the GDP, the unemployment rates and the demographic or population trends. High levels of GDP indicate a positive economic growth. However, a low GDP indicates low levels of economic growth. From the analysis of the available data, it can be ascertained that, although the European countries have shown generally positive trend in the growth of the GDP, there are instances where the GDP has sharply declined showing challenges or problems that may have caused a declining economic growth. In addition, the population trend shows that so far the economy of the European countries has sufficient population that is productive and that can be used to support economic growth. However, due to the low birth rates, it is expected that the economic growth may decline since in the near future; there will be less people to support the growth of the economy. In addition, the rising levels of unemployment evident between the year 2008 and 2014 would probably explain the declining levels of economic growth in Europe. High unemployment rates reduce the chances of economic growth.

From the results of the research, the European countries need to deal with the social issues affecting the society such as unemployment levels. The system needs to encourage self-employment more and encourage investment through incentives. In addition, there is a need to change the social policies regarding the birth rates so as to create a platform for future economic growth. More investment opportunities, minimizing social evils such as corruption would contribute positively towards the growth of GDP, which is a measure of economic growth.


The research aimed at analysing the state of economic growth within the European countries. Furthermore, the paper sought to identify if there are any economic challenges faced by the European countries and the possible remedies. From the analysis of the findings, it is evident that the European countries face a major threat for economic development in the future, although the current economic growth rate can be said to be favourable. Some of the factors that pose a major threat to the growth is the unemployment rates and the low birth rates. The GDP has shown positive trends towards improving the economic growth, however, there are times when it is very low and poses a threat towards the economic growth. The research offered elimination of social issues such as corruption, encouraging more investments and innovation through incentives and trying to change the social policies regarding birth rates as alternative strategies that can be used to improve the economic growth of the region.

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