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Europe dominates inflation and economic data appears that facilitate aid to Ukraine

The European Union avoided the recession that had been predicted. The forecasts are positive and the governments have more air to support Kiev.

They were all wrong. The European Commission, the European Central Bank, the World Bank, the IMF, the OECD and all the European national banks, in addition to dozens of private organizations, saw that from the end of 2022 Europe would go headlong into recession and that 2023 would be an economically disastrous year, with rising unemployment, rising inflation and recession. all failed.

The recession that was inevitable and of which only its depth was doubted does not appear in any medium-term horizon and the European Commission already began this Monday to slightly raise its economic growth forecasts.

There will be no recession in Europe in 2023 or 2024. A black swan can always appear to disrupt plans, but not even Vladimir Putin’s war in Ukraine and its correlate in the form of an energy and inflationary crisis could put a European economy into recession that shows signs of resistance higher than expected.

The European Commission announced this Monday that recession will be avoided and that the European economy will grow this year by at least 0.8%.

It is squalid growth, but it is not the four horsemen of the economic apocalypse that were expected just half a year ago. Brussels also improves inflation forecasts, which should approach “normal” levels (around 2% per year) at some point in 2024.

The new data even corrects the growth of 2022. If less than a year ago the European Commission expected that in 2022 the European Union would grow just over 2% to sink in 2023, now it calculates that growth in 2022 was 3.5% .




The European Commissioner for the Economy, Paolo Gentiloni, the head of the European Central Bank, Christine Lagarde, and other European officials, this Monday in Brussels. Photo: REUTERS

The Directorate General for the Economy of the European Executive ensures that the improvement in forecasts and data is due to factors such as the “diversification of supply chains” and a noticeable drop in natural gas consumptionwhich together with the achievement of replenishing gas reserves have caused gas prices to fall to pre-war levels.

Brussels also acknowledges that its employment forecasts were wrong. Now he says that “the European labor market has continued to behave strongly, with unemployment at its lowest rate (6.1%) for 20 years, the two decades of the common currency.

what’s coming

The European Commission still sees “headwinds”. indicate how risks the high energy prices for households and businesses and core inflation, which was still rising slightly in January “damaging the purchasing power of households.”

It also warns that as long as there are inflationary pressures there will be a contractive monetary policy that will reduce business activity and curb investment. They are practically the same ads that he launched six months ago and that the macroeconomic and labor evolution showed exaggerated.

Economic growth forecasts are up compared to October. If then, among the four major European economies, it was only clear that Spain would narrowly escape recession, now the other three are comfortably escaping.

The data of the European economy were presented this Monday in Brussels.  Photo: AFP


The data of the European economy were presented this Monday in Brussels. Photo: AFP

Spain will grow by 1.4% in 2023, but so will Italy (0.8%), France (0.6%) and Germany (0.2%). In 2024 Spain will continue to grow the most of the first four (2%), France will go to 1.4%, Germany to 1.3% and Italy to 1%. The European average will be below Spain with 0.8% in 2023 and 1.6% in 2024.

Inflation will also continue to decline. If in 2022 the average for the Eurozone was 8.4%, in 2023 it will drop to 5.6% and in 2024 to 2.5%. Spain improves these two figures with 4.4% for 2023 and 2.3% for 2024. That year Germany (2.4%), France (2.5%) and Italy (2.6%) will be very close. .

The economy and finance ministers of the 20 countries that share the euro (Croatia joined on January 1) reached the same conclusions as the European Commission after spending a year warning of the pit into which the economy would fall at the beginning of 2023. european.

The good news allows us to continue helping Ukraine, both financially and in arms, because the great criticism in Europe against that aid was always those who saw the economic damage to the European economy derived from the energy crisis and inflation. Neither the Germans had to heat themselves by burning wood in recent months nor were there blackouts in Europe due to the lack of Russian gas. The European economies knew how to stop buying hydrocarbons from Moscow and get new energy suppliers in months.

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