Eurozone: Countries Which Use The Euro As Their Currency (Essay Sample)

Economy
Name
Institutional Affiliation
Economy
Introduction
Wages in countries which use the Euro as their currency, commonly known as countries in the Eurozone, have seen an accelerated rise in wages in the three months leading to June. The economy of the 19 nations in the Eurozone has exceeded growth expectations going over projected growth margins. The factor that seemed to challenge and threaten the economy’s growth was the election, which took place in the following countries, namely, France, Netherlands and Germany. However, the election did not pose any threats and as a result, economists in the European Central Bank have forecasted that the Eurozone economy is on track to its best year since 2007, which translates to reduced dependency from policy makers in terms of support (Hannon, 2017). The increase in growth may be a sign that inflation may rise to the target projected by the European Central Bank. The relationship between growth and inflation has always been affected by wages. Increased wages boost inflation, since businesses increase their cost of production, which in turn translate to them increasing prices of goods and services, thus passing down the pressure to their consumers. The European Central Bank attributes the growth of the economy to the lagging behind of nominal wages, which are said to be the contributing factors towards inflation, thus guaranteeing growth and reducing chances of inflation. This being said, statistics from the European Union suggest that there information on nominal wages may have changed (Hannon, 2017). They attribute this to the 2.0% rise in wages during the three months through June compared to the previous year. This statistics contradicts the European Central Bank economist’s statistics, which had projected an increase of 2.0% in the next year and a 2.3% rise by 2019. With the constant rise in wages, the European Central Bank will reduce its bonds and government purchases by next year, since cost of businesses will have risen by then and little growth will have occurred. However the European Central Bank has said it will meet up with policy makers and discuss on the fiscal policy as well as monetary changes in order to make bond purchases more affordable. Credit Suisse economists have found out that many investors and traders give little attention to the Eurozone wages data since they previously did not account for consumer limiting their spending. However, that has changed and they urge that the traders and investors to pay more attention. The growth in the Eurozone economy is attributed to the growing number of employees in the Eurozone, which is as a result of improved job markets seeing a 0.4% increase (Hannon...