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Saturday, February 15, 2025

What does the future hold for Europe? “We have something to blackmail the Chinese with”

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International Monetary Fund at the beginning of the quarter, it published forecasts for the global economy. In short, they show that: The United States will growand the European Union will remain in economic stagnation and stagnation for the third year. Economic growth in the US is expected to be 2.7% in 2025. In the previous quarter, the IMF forecasted 2.2 percent, and six months ago it was 1.9 percent. Meanwhile, the forecast for the EU for this year is 1%. A quarter ago it was 1.2%, and two quarters ago it was 1.5%. Does this mean that Is Europe turning into an open-air museum and an economic corpse? Not at all.

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EU economy. “Kicking someone lying down is never elegant”

It is worth mentioning Poland's great results in the IMF forecast. Our country is expected to develop at a rate of 3.5%. Ministry of Finance he pointed out that Poland's result is above the estimated growth rate of global GDP (3.3%) and almost twice as high as the growth rate of developed economies. Meanwhile, Dr. Marcin Mazurek, chief economist of mBank, on Linkedin in context economic stagnation in the euro zone writes, among other things, that “kicking a lying person is never elegant, and recent months have been dominated by comments on this inglorious competition and that “complaining about Europe will soon reflect poorly on those who complain.” Such a comment was provided by the expert with the data presented by Jakub Wiech , editor-in-chief of the Energetyka24.com portal. In his opinion, “things are not that bad” and provided some data, e.g. car production in the EU – 12 million, in the USA – 10.6 million, steel production in the EU – 126 million tonnes, in the USA – 80.7 million tonnes. He also pointed to a large deficit in mutual trade in 2024: the value of exports from the EU to the USA – EUR 502 billion and from the USA to the EU – EUR 344 billion. euro.

Entry by Marcin Mazurek, chief economist of mBank Photo Screenshot/Linkedin

Europe is dying? “Ridiculous thesis”

The thesis that Europe is dying is so hackneyedthat it is starting to be ridiculous and dangerous at the same time. This is all in the past and the future is still open. I would suggest to rein in the reins, because everyone will still believe it, and that will be a problem, because managing expectations and narrative is extremely important – says Marcin Mazurek in an interview with Next.gazeta.pl and adds that in this case you can use ” an analogy with an absolutely cruel experiment once performed on rats.

A drowning animal fought much longer if it had a vision of salvation (a stick) in front of it. Without this vision, it gave up and sank. And we really need a vision, not putting on sackcloth

– says the chief economist of mBank. According to him, the fact that the IMF forecasts a faster growth rate in the USA than in the EU or the euro zone is not surprising. He emphasizes that this is a “forecast for a very short period, one or two years ahead.”

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– In such a time horizon, it is difficult to fundamentally improve anything with the policy of regulation, the construction of long-term plans, and it is also rather difficult to spoil it. Besides, let's talk about the trend, which is shaped by structural factors, and the cycle, says the expert.

The main economic “diseases” of Europe

– IMF forecasts focus mainly on the cycle. The euro zone is suffering from echoes of monetary tightening, which was aimed at fighting inflation – for once. Inflation also put quite a dent in household income – that's two things. Wages in the euro zone and the EU they grew really slowly over the years. In a situation of large price shocks, this turned out to be a problem – says Marcin Mazurek. He emphasizes that Europe also suffers from “not so much cyclical but incidental changes in the demand structure that occurred after the pandemic.” – Everything looked nice during the reconstruction, when people switched to remote work and bought goods. Later, however, it moved towards services in which Europe does not specialize and has neglected them – says the economist and adds “the division work However, it looks different in Europe than in the USA: services are less popular” – When the pendulum moved in this direction, nice restaurants, historic hotels and medieval tourist attractions were not enough – the expert tells us.

On top of all this, there were “energy problems that hit the industry.” The expert emphasizes that it is difficult for him to understand “being ignored by the European automotive industry Chinese competitionand even plans related to energy transformation in general. – About ambitious decarbonization plans European Commission after all, she had been honking for a long time. Case? An unfortunate coincidence? Or maybe the belief that everything can stay the same? But everything can be changed. For now we have a bucket of cold water, but it seems to be working. European car manufacturers are reporting a lot these days patents and can boast of interesting solutions in their BEVs – says mBank's chief economist.

“Negative cyclical factors will pass”

In his opinion, negative cyclical factors will pass. Demand for goods will return, interest rates will fall. This will support GDP growth. – This does not mean that the sun will suddenly rise over Europe, but – and I am betting here – the defeatist tone will be softened, because people tend to treat complex problems as simple and use simple diagnoses. And that's not true, says the expert. According to him, Europe “is not fighting for the upper hand in basically anything right now.”

Digital services are in the US, mass electronics production is in China, and the arms industry is also mainly outside Europe. It will be difficult to catch up and change – time is running faster now. Perhaps Europe doesn't want to race here after all and has no aspirations to race at all. Or maybe people in Europe want to live in peace? In my opinion, the direction of improving the quality of life has been quite clear for a long time and with any GDP growth, this direction can be maintained

– says the interviewer of Next.gazeta.pl. He adds that The European Union now approaches work differently than in the United States and completely different than in Asia. – An employee is important, and his or her functioning in the labor market is subject to many regulations that protect him or her. In fact, in Europe, health care is basically free. We may not appreciate it, but people who decided to move out of the US, even to Poland, cannot praise it enough. And also the fact that they can go somewhere on foot, use cheap public transport and feel safe in their own city and in the surroundings of their own apartment. Personally, I like such an open-air museum, the economist tells us.

“Europe can start to repair itself.” Down with fiscal brakes

In his opinion, “although the quality of life will theoretically remain the same slight GDP growth“, such a development path does not have to mean dooming to stagnation” – Europe can start to repair itself. In recent years, the EU has been generating huge trade surpluses. Among others, with the United States, what now angers Donald Trump. I really don't like to praise this man, but he is right. It may be based on the wrong premise, but in the end it's his policy towards the EU may be effective in repairing the EU itself, says the expert. He emphasizes that a trade surplus means that there is a significant excess of savings over investment. – This, in turn, means that Europe is underinvested – first of all. Secondly, if there are too many savings, this is also the result of low consumption, both on the part of households and on the other governments. Who likes low consumption, saving for the sake of saving? Probably no one, says Marcin Mazurek.

He adds that a lot could change “if only the euro zone suddenly wanted to spend more money and this is where public spending comes into play.” – Current debt levels due to years of pressure to hold on Maastricht criteria they are not exuberant – I can imagine hundreds of infrastructure projectswhich have a higher rate of return than must be paid for the debt used to implement them. In my opinion Europe should, first of all, move away from fiscal brakeswhich are excessively restrictive and the commander-in-chief and the main force tightening the belt, i.e. Germany, must start spending money. We are getting closer to this, because soon there will be elections in this country, which can change a lot – he says.

Public spending is key

According to our interlocutor, public spending, especially public investment, is extremely important. – In my opinion, this is an even more important element of long-term economic policy than pointing fingers at who will be the national champion. The difference is fundamental: in the first case, we let the market, entrepreneurship and the search for profit act. We give a chance to many solutions that we do not list exhaustively. Finger pointing is tainted by a fundamental problem: what if we make the mistake of putting all our eggs in one basket? – Marcin Mazurek wonders. The economist believes that infrastructure spending in the EU “can produce an entire network of private companies.” – It's a bit like a subsidy, but the best person wins and every citizen wins, because the quality of public services improves – he says.

Trump, the “alpha male” across the Atlantic

– We complain about the regulations that The European Commission is exaggerating, “straightening the banana” etc., but attention should also be paid to the second aspect of this state of affairs. The EC actually releases a lot of these regulations, but the internal market in the EU is still so attractive that all regulations regarding environmental protection, data and privacy are taken into account by companies operating globally. And this generates a positive snowball effect, the economist believes. He points out that even though Europe does not have any major army, “it is still able to influence trade relations around the globe, standards, company behavior and the specificity of goods and services through its soft power.” He emphasizes that the EU has a clear agenda. – We know that we will focus on energy, clean energy, it is there all the time Fit For 55 and in the short term the EU will certainly get punched in the teeth because of this. Because at the moment when on the other side of the Atlantic we have the alpha male Trumpwho settles everything by force and withdraws from everything Europe is involved in, it may be difficult and uphill, but Trump will not rule forever – says the economist. He adds that “we don't know what will really electrify voters in 4 or 5 years” – Maybe we will return to the status quo, maybe people will be interested in what will happen in the real future, and not necessarily in the future, which is complex only from the next year – says the expert.

Europe has something to “blackmail” the Chinese

In his opinion, in the near future “the European Union will also have to, by necessity build some military industry and rearm yourself”, because this is currently a “quite natural direction”. True green transformation is starting to be treated as a ball and chain, “however, in order to learn something new, Europe has to get its hands dirty and if we don't do it, we won't create companies that will be able to compete and we will always be stuck with the Chinese in this field.” According to the chief economist of mBank, it is not the case that Europe has nothing with which to “blackmail” the Chinese.

For example, there is a nice Dutch company called ASML, which produces equipment for the production of semiconductors and it is basically a global monopoly. Everyone would like to have machines from ASML, the Chinese do not have them, so they are absolutely stuck with this company. The Americans do not have their own solutions here either

– he emphasizes. He also points out that, for example, “Europe produces planes that fly, not park at airports.” Moreover, the EU still has “sensible research institutes”. The expert mentions in this context, for example: German Fraunhofer Instituteto which we currently owe, among others, the existence of streaming. Because that's where he stayed developed mp3 codec used “everywhere and universally”. – I really understand that my arguments can be refuted by other ones. As I pointed out, the past does not determine the future. However, expectations are already decisive. Often, what counts is the will and courage itself. And that's hard to do when all the attention is focused on self-flagellation. Enough is enough – sums up Marcin Mazurek.



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