At best, the economy in the next two years will grow between 0.5% and 1%, while the US will run at a rate of over 3%. The warning comes from analysts at Standard & Poor’s. But it is only the first of the cold showers given away yesterday. The ECB endorses the view that the balance of risks hangs down, there is only talking about inflation or growth, adjusted to 1.2% (from 1.5%) for the next year. Roughly in line (1.1%) with the latest forecasts of Brussels, which gave a clear scissor kick to the figures of six months ago, without excluding new downwards corrections and candidly acknowledging that the euro area with the slowest growth rate.
Before the G-20 meeting in Brisbane, Australia has also felt the IMF talking about gradual but uneven growth, with Spain in recovery but Italy, Germany and France, the three largest economies in the euro, in retreat. In the background, a scene from the high risks: the drop in prices makes real interest rates rise, threatening already weak development and debt sustainability.
Evidently, neither the increasingly accommodative monetary policy of the ECB’s Mario Draghi, nor the forecast for oil prices stabilizing at around $90 a barrel, or the devaluation of the euro against the dollar, which supports the export stimuli, are sufficient to shake the euro zone from the torpor into which it has fallen, and from which it cannot get out.
Even more depressing figures that continue to succession day after day alarmed the blissful indifference rather than placid starvation with which Europe is experiencing its own economic woes, as if they were not its own, but someone else’s. Of course, structural reforms are insistently and reasonably required, since they are the trump card to increase the growth potential. Too bad that they do not only require time to be implemented, but also to bear fruit.
Of course, it goes also about the now famous plan Juncker 300 billion in three years to give a strong boost to investment, especially private. The proposal will come before Christmas. But then it will be discussed and negotiated by finance ministers, approved and who knows when it will be ready for use. Excessive skepticism? Hopefully. Unfortunately, the EU plans for growth are full of words, but empty of resources and in the end unable to go further than the excessive rhetoric.
The stringency becomes a bit more flexible, not to induce reluctant governments to pull the plug forgetting the undertaken European commitments.
The facts and figures, however, have amply demonstrated that the Eurozone is not going anywhere: scraping a living, surviving without dynamism does not put Europe in step with its large global competitors. It simple loses out. Even Germany, the economic powerhouse of the Eurozone, may be soon short of breath.
Out in the global world China strikes deals with South Korea, Russia and Japan, crumbling century-old enmity to be the center of gravity of the new geo-strategic and economic power of Asia, that contends the supremacy of the West. But China itself did not hesitate to conclude technological pacts with the United States; Barack Obama has always been attracted to that border of the Pacific, its potential complementarity.
But Europe appears to be completely absent from the great game overall, even uncertain about the promises of TTIP, the great transatlantic economic agreement as well, through greater integration and complementarity with the US economy, which could give a healthy boost to its anemic potential growth.
For now, Europe prefers to be satisfied with its old world, no matter if it is now a construction site in the process of demobilization and industrial desertification. It does not matter if it is beset by 26 million unemployed, a human tragedy with a scandalous waste of resources. And that Maastricht Treaty rules were created and made sense in another Europe, that 30 years ago experienced an average growth rate of 3-4% per year.
Today EU is made by a club of countries discouraged and tired of being together that think they can with impunity give you the luxury of flirting with recession or live long with an average growth rate below 1% in the next decade. Without realizing it, so slowly organize their own political, economic and financial suicide.