2023-09-11 17:02:21
Economic activity slows down in the Eurozone. This is confirmed by the economic forecasts presented this Monday by the European Commission, which indicate that the countries of the common currency will grow by 0.8% this year and 1.3% in 2024 – which is three tenths less than what was expected. I expected in spring. The fall in domestic consumption – as a result of the rate increases by the European Central Bank (ECB) – has slowed down the European economy and has had a special impact on Germany, which will close the year with a fall of 0.4%. In the case of Spain, Brussels has improved its estimates and predicts that the country will lead the economic growth of the bloc, with an advance of 2.2% of its Gross Domestic Product (GDP) in 2023 and 1.9% the year comes.
Despite the stagnation, Brussels highlights that the Eurozone economy “continues to grow” in an economic environment marked by the persistence of inflation. The Commissioner for Economy, Paolo Gentiloni, stressed this Monday that the euro zone and the EU “have avoided recession during the winter and have lost ‘momentum’ in recent months.” Despite everything, he stressed “the effectiveness of community economic policy in the face of the enormous shocks that the economy has faced.”
In particular, the good data from Spain has been surprising, which will be the economy that grows the most in the Eurozone, ahead of France (1%) and Italy (0.8%). “Spain has exceeded all our expectations,” Gentiloni acknowledged. Brussels’ forecasts are even more optimistic than those of the Spanish Government, which estimates growth of 2.1% for this year. The European Commission, on the other hand, cuts the outlook for 2024 by 0.5% compared to Madrid’s estimates, which expects economic progress of 2.4%.
“Spain has a better situation than other countries in the Eurozone in economic activity and inflation,” highlighted the Commissioner for Economy, who assured “not to be worried” about the political situation in the country, with an acting Executive and a possible repetition election at the end of the year.
After knowing the community data, the first vice president and Minister of Economic Affairs, Nadia Calviño, celebrated that Spain “will be the large economy that will grow the most in 2023 and the one that will have the lowest inflation.” “Our economic policy works and allows us to face with confidence the current complex economic moment of slowdown,” she added.
Inflation and monetary policy
As for inflation, it is expected to continue reducing throughout the year and to close 2023 at 5.6%, before falling to 2.9% in 2024. Brussels warns that the situation will vary between Member States and that Prices will be more persistent than expected in central Europe and Eastern countries, while they will moderate in the rest of the Eurozone.
These data will still not completely please the ECB, which meets this week in Frankfurt and which insists that it will do “everything in its power” to contain inflation below 2% in the medium term. Taking into account the persistence of prices in recent months and the most recent calculations, it is not ruled out that the European institution will announce a new interest rate increase (currently at 4.25%).
Brussels warns that the tightening of monetary policy “could weigh down the activity of the Eurozone more than expected.” Of course, it highlights that greater pressure on interest rates could also accelerate the fall in inflation and result in a faster recovery. The document highlights that the first half of the year “has gone better than expected”, but foresees a greater slowdown in the coming months. It will especially affect the industrial sector and services will also lose momentum.
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