An employee prepares a robot at a Volvo group factory in Garchizy, France.Nathan Laine (Bloomberg)
The European economy has ended the year absolutely stagnant.
The GDP for the last quarter of 2023 did not move compared to the previous three months, 0% say the numbers published this Tuesday by Eurostat for the euro zone and the EU as a whole.
These data continue the situation of economic stagnation that has been seen throughout 2023, reaching growth of just 0.5%, a result that is mainly due to the inertia at the end of 2022.
There has been news about the paralysis that the European economy is experiencing all year.
The data published by the European statistics office, Eurostat, shows that the EU and the euro zone have spent 2023 on the verge of technical recession.
If they have avoided it - with permission that any subsequent review of the data released this Wednesday does not change the preliminary conclusion - it has been by just tenths.
For example, between July and September of last year there was a slight contraction of -0.1%;
to the next, that 0% that avoids the chain of two consecutive quarters of decline and would have reached Europe into technical recession.
The GDP figures of recent years provide a fairly approximate x-ray of the roller coaster that Europe—and the world—is experiencing so far this decade and its economic consequences: the collapse caused by the pandemic, the rapid recovery cruise, the stumbles caused by bottlenecks in supply chains, the fear that followed Russia's invasion of Ukraine and, finally, the slowdown caused by the energy crisis, inflation and the monetary policy response, all seasoned by a China that no longer imports
made in Germany
as it did.
And it is this last chapter that the European economy is reading at the moment, that of the slowdown that has led it to a stagnation in which it seems that it will continue in the near future or, at least, from which it will gradually emerge. tenor of the forecasts disclosed by public and private study services in the last two months.
Goldman Sachs predicts slight growth of 0.7% for the euro zone in 2024. ING published a long report a few weeks ago in which it repeated the word “stagnation” over and over again.
The European Commission, in its last prediction last year, pointed to a slight growth of 1.2%, a figure that may be revised in the coming weeks.
That weakness remains, for now, linked to some of the causes that caused the slowdown brought about by Russia's invasion of Ukraine.
Inflation has dropped a lot from the very high levels it was 12 months ago (above 10%), but it remains high.
Prices refuse to return to the 2% range pursued by the European Central Bank (ECB) and, furthermore, from time to time they leave the occasional scare with spikes like the one seen in January in Spain.
This leads the orthodox guardian of monetary policy to ignore for the moment the signs of economic weakness and continue with his compass oriented exclusively to the control of the CPI, that is, high interest rates that make credit more expensive and end up cooling economic activity.
The strength shown by the labor markets—even in the eternally ill Spanish market—allows it to maintain that course for now and postpone, for the moment, lowering interest rates.
The German situation also does a lot to explain why the European economy is at a standstill.
The continent's leading economy is suffering, on the one hand, from the change in its energy model: cheap Russian gas has stopped flowing through the gas pipelines and with it part of German industrial competitiveness has disappeared.
And, on the other hand, China no longer matters as it did due to geopolitical tensions and because the Asian giant's own economic model is also in question, its spectacular growth figures close to double digits are becoming far away, Goldman foresees a modest increase in activity of 4.8%.
This has led Germany to a contraction of 0.3% in the last quarter of 2023, which is preceded by two other quarters of absolute stagnation (0%).
Geopolitical uncertainties also play their part in explaining economic weakness.
The war in Ukraine is dragging on and heading into its third year with no signs of it being resolved soon, once kyiv's impotence to recover what was lost in the early stages of the invasion has become clear.
The Israeli bombings in Gaza still continue and hardly a week goes by without some news that threatens to extend the conflict in the region (attacks on ships in the Red Sea, selective assassinations in Lebanon, attacks in Iran, militias allied to the regime of the ayatollahs attacking US bases in the area).
And above all this situation lies the structural need that the European Union—and the entire planet—has to change its growth model and decarbonize the economy.
This transition can mean, in the short term, loss of competitiveness and, at the same time and over a long period of time, huge investments that avoid or cushion it.
This money has to come from the private and public sectors, but the latter is trapped between the need for investment and the need to reduce the very high levels of debt that, in part, have been reached in those roller coaster years that have taken place. has lived so far this decade.
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