Why is Europe the most sensitive area in the world to the current economic slowdown?
The latest IMF data draw a warning situation, but not alarm. Already in November, the OECD warned that world expansion had "reached its maximum". It predicted a global growth of 3.5% for 2019, two tenths less than in 2018. The Fund points to that.
The downward revision (also two tenths) is due in large part to the eurozone, which would go from 1.8% in 2018 to 1.6%. The third worst developed brand, after Japan (1.1%) and the United Kingdom (1.5%). It would lose bellows after a good five years.
The immediate cause is the negative sequence of the car in Germany (one third of GDP in the euro area). For its problems of adaptation to the ecological directives. And lower external demand, a reflection of the fall in China's GDP, which will be the worst in 28 years (6.2%).
Germany grew somewhat last quarter (against the decrease of two tenths the previous), avoiding the recession by the hair. It closed the year surely at 1.5%; it will be 1.3% in 2019, according to the Fund.
Italy accompanies Germany because of its sovereign and financial risk. A symptom is the crisis of Banca Carige, recently intervened by the ECB. It will slow down almost by half (from 1% GDP growth in 2018, to 0.6% in 2019).
Significantly, Spain escapes the rule. It will remain at the head of the large economies of the area, with a forecast unchanged for 2019 (2.2%, same as that of the Government). Despite its noise, the many premature jeremiads of anti-government political intent do not twist Washington's technocratic calculator.
If Germany is the immediate geographic cause, the ultimate reason for the special vulnerability of the eurozone to the retreat of the world situation lies in its own structure as the most open economy in the world.
In other words, the worst augury for growth and world trade, the most open region affected the most: sensitive, above all, to the protectionist tide and oil instability.
In fact, the EU's foreign trade (a 28) totaled 3,738 billion euros in 2017, 103 billion more than China and 239,000 more than the US (Eurostat).
The mild deceleration is already reflected in the fall in inflation. It was 1.6% in December, against a range of 1.9% to 2.2% between May and November. It moves away from the central objective (2%) of the ECB.
Perhaps in his conclave today he will heed the advice of the IMF: "The main central banks are aware of the slowdown, and we hope that they calibrate their next steps [de “cuidadosa normalización”] in line with this data. "
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