“Anemic European growth is relatively good news”

“Anemic European growth is relatively good news”

EconomySep 7 23 13:07Autor: Bram van Eindhoven

The eurozone economy grew by exactly 0.1 percent in the second quarter. “It’s a very small number,” says economist Edin Mojácic, but he thinks this is partly good news.

The eurozone economy grew by exactly 0.1 percent in the second quarter. “It’s a very small number,” says economist Edin Mojácic, but he thinks this is partly good news. (Afghan National Police / Peter Hills)

In terms of keeping inflation in check, Mojacic says the very modest growth of the economy is not bad news. “You need some time of low growth to solve the inflation problem, and you can’t fix it unless you cut demand. So that’s relatively good news, but a little growth is basically bad news.

Germany

Inextricably linked to the minimal growth of the European economy is the fact that the German economy has been in dire straits for some time. “All indicators of that economy show that a new downturn is very likely, and it’s not going well structurally in that country,” Mojacic said. “And if things go bad for Germany, it’s hard for things to go well for the eurozone. Because Germany still accounts for more than a quarter of the European economy.

Read also | The Dutch economy is becoming less “German”

In this regard, it is good that the Dutch dependence on Germany as a trading partner has decreased over the past 40 years, according to the Central Planning Office’s calculations also at the end of August. According to Mojacic, trading with the Netherlands’ second trading partner, the United Kingdom, has become less pleasant since Brexit. “Trade is a little more expensive, but the economy is not in a good shape either.”

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budget gaps

In light of this, it would come as no surprise that the growth of the Dutch economy, which is estimated to grow at 1.4 percent next year, is lower than what we currently expect. “This means less revenue for the government, and perhaps next year another round of searching for funds to fill new gaps in the budget.”

Read also | Germany is waiting for a longer period of recession

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