While its economy is weakening and consumer-price gains remain elevated, Europe isn’t suffering from so-called stagflation, according to European Commissioner Paolo Gentiloni.
(Bloomberg) — While its economy is weakening and consumer-price gains remain elevated, Europe isn’t suffering from so-called stagflation, according to European Commissioner Paolo Gentiloni.
“It’s too soon to say that we’re in a stagflation framework,” Gentiloni, who’s responsible for economic matters, told Bloomberg TV. “The forecast is for 2023 growth of 0.8%. Is this something of long duration? Our estimate is that we will have probably a rebound already next year.”
The remarks come after the release earlier Monday of updated projections from the commission, revising the 20-nation euro zone’s growth outlook down for this year and next, largely due to the struggles in Germany.
Despite dodging a downturn in the wake of Russia’s attack on Ukraine, the euro region faces headwinds from higher energy prices, a surge in borrowing costs and waning demand in export markets like China.
Data released last week revealed output in the bloc barely grew in the three months through June, revised lower due to poor foreign sales. Inflation, meanwhile is still above 5%, which may prompt the European Central Bank to lift interest rates again later this week.
“I don’t think it’s easy now to say we won the challenge with inflation, so let’s concentrate on spending and investments,” Gentiloni said. “We’re near to the peak of interest rates, but the decisions will be taken of course by the ECB and not by the European Commission.”
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