Hard times. The reading of the economic forecasts presented this Friday by the European Commission shows that the economy of the old continent is on the right track a slowdown that will border on recession.
The GDP of the 27 will grow by a scant 0.3% in 2023 and inflation will remain above 7%, a rate that generates serious political consequences and economic effects in a continent that has not known inflation of this type since the times of the crises oil companies of the late 70s of the twentieth century.
This 2022 will still be growing. The European average will reach 3.3% of GDP. Its four largest economies will grow unevenly: Spain 4.6%, Italy 3.8%, France 2.6% and Germany 1.6%. The German economy will cause the big slowdown in 2023.
Despite the fact that the entire bloc could experience a first half recession (economists like to say “negative growth”), the collapse of the German economy (-0.6%) will be responsible for the barely growing blockade that 0.3% next year. Italy will do so by 0.3%, France by 0.4% and Spain by 1%.
2024 will certainly not be better: average growth will be 1.6% with Italy at 1.1%, Germany at 1.5%, France at 1.6% and Spain at 2%. .0%.
The Spanish economy has grown the most in this three-year period also because it was the one that fell the most during the pandemic and is benefiting from the last throes of the rebound effect and the traction that the post-pandemic European funds are generating.
The European Commissioner for the Economy, the Italian Paolo Gentiloni, said in Brussels that “the economy is turning around after a surprisingly strong first half (of 2022). It lost that momentum in the third quarter and data point to a contraction this winter.
Remnants of war in Ukraine
Europe maintains sanctions on Russia and economic and military support for Ukraine despite the fact that almost every reason for Europe’s inflation and economic slowdown lies in that conflict. Gentiloni acknowledged that in this last quarter of the year “most of the countries of the European Union” will suffer an economic contraction while most are experiencing record inflation rates.
is the stagflation scenarioeven if forecasts indicate that it will not last long because with the recession prices will begin to grow less.
Beyond the debate whether we can technically speak of a recession (two consecutive quarters of negative growth), the data released by the executive of the European Union are the confirmation that the European resistance to the economic effects of the war is beginning to subside and that the Rising prices, mainly due to unprecedented energy prices in Europe, are slowing down economic activity.
Europe seems to have experienced the peak of inflation between September and October, when in the 19 countries that share the common European currency, the euro, it exceeded 10% on average. Since then, leading indicators show it is starting to ease. Brussels expects annual inflation of 9.3%. Gentiloni explained that “inflation should drop moderately next year, reaching around 7% for the European Union and 6.1% for the Eurozone”. In 2024 the decline will continue.
The European Central Bank has responded to rising inflation with rate hikes, an orthodox monetary policy move that has drawn much criticism because much of Europe’s inflation is imported through energy prices and because those leading indicators it manages the European Central Bank imply that inflation was already starting to come down before interest rates started to rise.
Inflation at these levels, while seen from Argentina it may seem trivial, is new to any European under 45 and has mass effects. It reduces private consumption and damages the competitiveness of European industry, the continent’s export engine.
Fighting against rate hikes makes investments more expensive and forces tens of millions of European households to pay more for home mortgages.
The only good news is employment.. Its resilience to the economic slowdown and inflation is surprising and better than previous economic forecasts predicted. Never before have so many Europeans worked (about 213 million) and the unemployment rate will be around 6.5% in the coming years.
Gentiloni recalled that the lack of manpower in many sectors is also important. These problems will be corrected over the next couple of years without unemployment falling sharply as more and more countries are below 5%, a rate economists treat as full technical employment.
Brussels, special
B. C
Source: Clarin
