The countries of the Eurozone face 2023 with less pessimism than predicted before the Christmas break and are confident of avoiding the recession that many analysts and institutions predicted at the end of last year. “The economic situation is still uncertain (but) we have some encouraging news. We have managed to reduce energy dependence, energy prices have fallen significantly and inflation peaked at the end of last year, so there is a chance of avoiding a deep recession and perhaps suffering a more limited contraction,” the commissioner said on Monday. for economic affairs, Paolo Gentiloni, on the margins of a Eurogroup that has evaluated the economic situation, the digital euro and the budgetary policy of the euro countries.
“It is fair to recognize at this time that the situation has improved as the end of the year approaches and we are confident that we will be able to continue to make positive progress,” said Eurogroup President Paschal Donohoe after the meeting. Everything will depend, added the former Italian prime minister, on the policies that the European Union deploys this year, a year that will still be “difficult”. According to Gentiloni, to avoid the worst, the EU will have to continue working on the implementation of the recovery plans, on finding an agreement to review the fiscal rules of the Stability and Growth Pact, on supporting competitiveness and boosting investment, and on improving the coordination of fiscal policies with specific and temporary energy aid.
“(If we succeed) it would give us the opportunity to avoid a deep and prolonged recession,” he insisted, stressing that the figures, numbers and indicators they are seeing “tell us that we can avoid a recession and have a short contraction period” . Among the encouraging elements, he mentioned that growth in the third quarter of 2022, slightly higher than expected, oil and gas prices that have fallen below pre-war levels, labor markets that have shown strength, a economic confidence that has begun to recover and a headline inflation rate that appears to have peaked.
Stay Vigilant
The economic vice president Valdis Domvrovskis, although with a more prudent tone, shares his opinion. “Clearly we are seeing some positive signs and for example labor markets remain very strong and there are also some indications that inflation may have peaked but we have to remain vigilant in the face of the still difficult period we have to navigate.” calling for “adequate” measures. Among the economies that are showing greater strength and resilience is the Spanish one, which, according to all forecasts, will register “growth of more than 5% in 2022”, recalled the vice president and minister of economy, Nadia Calviño, who despite the uncertainty places Spain as one of the engines of economic growth in Europe this year.
Like the rest of his colleagues, Calviño has heard this Monday the latest diagnosis from the European Commission and the European Central Bank and has presented the latest package of measures adopted by the Government at the end of last year to deal with the rise in prices and inflation. The president of the Eurogroup has asked the Dutch minister, Sigrig Kaag, and the Frenchman Bruno Le Maire, who, upon his arrival at the meeting, highlighted the improvement in the economic situation and the more positive results than expected. “This is good news and a sign of the strength of the European economy. The French economy, for example, is holding up well at this start of 2023. Our priority now is to continue fighting inflation with targeted measures”, she explained.
State Aid
France is also putting pressure on Brussels to put on the table a “made in Europe” strategy and an ambitious plan to guide the debate at the European Council on February 9 and 10. Brussels will present at the end of the month the plan to counter the US inflation reduction law, which will mobilize 369,000 million dollars in green subsidies this year. “We are identifying the needs and the projects that we could finance jointly. It will be the basis for later identifying the amount and the way in which we are going to finance”, Gentiloni explained after the Eurogroup on a strategy with two pillars: the rationalization of the aid framework of state and aid to some strategic sectors to avoid fragmentation.
This article is originally published on elperiodico.com
