Friday , 19 April 2024
Home Global Economy Between hope and fear
Global Economy

Between hope and fear

It's something between hope and fear: on the one hand, hoping that the economy in the entire European Union will leave the consequences of the pandemic behind in the next few months and will clearly pick up speed again – and fear, because rising inflation will certainly endanger these rosy prospects could. Namely, if it does not come down from the current level of well over four percent.

Cautious optimism on the part of the EU Commissioner

However, in the winter economic forecast presented in Brussels today, this risk is not considered to be all that great, at least by the EU Commission. Although EU Economic Commissioner Paolo Gentiloni is now expecting price increases for the euro countries to average 3.5 percent this year, prices are then expected to calm down and inflation is only predicted to be 1.7 percent for 2023.

Some economists think that's optimistic, Paolo Gentiloni thinks it's realistic, because the pressure from the delivery bottlenecks – caused, for example, by transport capacities that are still tight at the moment – will ease. And there are also signs of relaxation in energy prices, according to Gentiloni.

Rising interest rates not desirable

If that happens, the medium-term price increase rate would also fall below the two percent target set by the European Central Bank – in any case, this forecast should continue to fuel interest rate fantasies with a view to the ECB's monetary policy course in the coming months. For the economy in Europe, which is currently in the process of recovering from the pandemic, rising interest rates would at least be less desirable because they would make loans and thus investments more expensive.

In fact, the EU Commission is assuming quite robust economic growth rates this year and next: For 2022, they are expecting a plus of four percent for the countries of the monetary union in the EU, and in 2023 it should be 2.7 percent. According to the Commission, in the course of this year all EU countries should be able to exceed the pre-crisis level in terms of economic strength with a view to Corona.

risks remain

All in all, hopes outweigh fears in this forecast – but Economic Commissioner Gentiloni openly admits that risks remain. It is still not clear whether the pandemic can actually be overcome this year. On the other hand, the growing international tensions are a cause for concern – above all the risk of war in Ukraine.

For Germany, the EU Commission expects economic growth of 3.6 percent this year, and the German inflation rate will average 3.7 percent.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles

Global Economy

Spotlight on 2023: S&P 500 and the Significance of the 4400 Level

In our past exploration of the financial landscape of 2023, we delved...

Global Economy

AI and Data Analytics Drive Efficiency in Money Laundering Detection

BIS Innovation Hub Turns to Tech for Money Laundering Detection The BIS...

Global Economy

Russell 2000 Gains Momentum as Tech Stocks Outperform Value

Tech stocks have dominated the equity markets in recent months, surpassing value...

Global Economy

Crypto Exchange Bybit Announces Exit from Canadian Market Amid Regulatory Changes

Regulatory Shifts Prompt Bybit's Strategic Withdrawal from Canadian Crypto Market