“European average growth is relatively good news”

The eurozone economy grew by exactly 0.1 percent in the second quarter. “It’s a very small number,” says economist Edin Mojácic, but he thinks this is partly good news.

In view of reducing inflation, the very modest growth of the economy is not bad news, according to Mojacic. “You need a period of low growth to solve the inflation problem, and you can only tackle it if you cut demand. So that’s relatively good news, but basically a little growth is bad news.

Germany

Inextricably linked to the minimal growth of the European economy is the fact that the German economy has been in dire straits for some time. “All indicators related to this economy show that a new downturn is very likely, and things are not going well in this country from a structural point of view,” Mojacic said. If things are going badly in Germany, it is hard to go well in the eurozone. Because Germany still accounts for more than a quarter of the European economy.

Read also | The Dutch economy is becoming increasingly less “German”.

In this regard, it is positive that the Netherlands’ dependence on Germany as a trading partner has decreased over the past 40 years, as the Central Planning Office’s calculations also indicated at the end of August. What is less pleasant, according to Mojacic, is that trade with the Netherlands’ second trading partner, the United Kingdom, has been somewhat difficult since Brexit. “Trade is a little more expensive, but the economy is also not going well.”

budget loopholes

In light of this, Mojácic would not be surprised if the Dutch economy’s growth, estimated at 1.4 percent next year, turns out to be lower than we currently expect. “This means less income for the government, and perhaps next year a new round of searching for money to fill new gaps in the budget.”

Read also | Germany faces a longer period of recession