Both sides of the euro closed the year with difficulties. Italy, the second most indebted European economy, went into recession in the final stretch of 2018. And Germany, whose budget policy clings to fiscal discipline, skirted it and was literally stagnant. But the euro is a single currency and the economy that supports it is aimed at a more pronounced deceleration than expected after a figure which is the smallest advance since 2014.
The balloon to which the European economies have risen has been in the air for 23 consecutive quarters. But it is increasingly difficult for him to gain altitude. The same winds are no longer blowing just a year ago, when the whole of the euro zone grew above the United States. Now Europe is facing other currents that the European Commission summed up last week: the US-China trade wars and the political and social tensions (Brexit, France or Italy) within the EU.
And with a colder climate and flying at great heights, the European economies do not already have the asset purchase program (PPA, in its acronym in English) of the European Central Bank (ECB) to increase the fuel pressure. Mario Draghi, its president, put an end to that policy at the end of last year. But with an inflation rate that fell back to 1.6% at the end of the year, Draghi has been warning in his speeches that a "significant volume" of monetary policy stimuli is still needed to support an increase in prices. that is around 2%.
And in that context, hawks already warn that a euro zone whose seams are not yet ready for a crisis put the independence of the ECB at risk by placing it on the front line of the trench. Without referring to the current situation, the president of the Bundesbank, Jens Weidmann, assured the past Tuesday in a conference in Pretoria (South Africa) that "certain subjects, like the lack of credibility of the fiscal rules or the harmful nexus between the banks and the sovereign debt still must be approached suitably", according to informed Reuters.
Germany and Italy explain the shy 0.2% increase experienced by the GDP of the euro zone in the last quarter of the year. "The slowdown in Europe is undoubtedly due to a long series of transitory factors, such as the crisis of yellow vests in France or the problems of the automotive sector in Germany," says analyst and ex-secretary of the Italian Treasury Lorenzo Codogno. Even so, Codogno sees complicated to attribute all this tendency to temporary factors: the moderation of the rate of exports is "considerable" and the indicators point to another crisis in the south, this time in Italy.
The economist lists a series of circumstances that continue to pose a problem for the European economy: structural weaknesses, erroneous fiscal policies, the situation of the banking sector and the lack of macroeconomic stabilization. And he ventures that this deceleration of the euro zone "probably" translates into a "deep recession in Italy."