Guindos (ECB) assumes the entry into technical recession of the eurozone

Calls for structural reforms and promoting market integration to raise the potential growth of the euro zone

MADRID, 29 Ene. (EUROPA PRESS) -

The vice president of the European Central Bank (ECB), Luis de Guindos, assumes the possibility that the euro zone economy has entered a technical recession in the fourth quarter of 2023, by chaining two consecutive quarters of decline, although he has stressed that, In any case, it will not be a deep recession, pending the preliminary data that Eurostat will publish this Tuesday.

"There may be a technical recession," acknowledged the former Spanish Minister of Economy in an interview on RNE, where he downplayed the difference between a tenth of a fall or stagnation, stressing that "we have not entered a deep recession."

"What I would tell you is that the recession is not going to be deep and that the labor market is holding up," added Guindos, recalling the ongoing disinflation process, which has slowed the rise in prices to less than 3%, while The labor market continues to perform well.

"According to our projections, the slowdown in inflation and the disinflationary process will continue without having generated a deep recession, because that can be ruled out, and with a good performance of the labor market," summarized Guindos, for whom, with all its shadows, "there are also lights in the evolution of the European economy".

The community statistics office, Eurostat, plans to publish this Tuesday its first estimate of the GDP growth data of the euro zone in the fourth quarter of 2023, after between July and September the region registered a year-on-year drop of 0.1% , leaving the door open to a technical recession.

On the other hand, the vice president of the ECB has shown his concern about the risk that the weak growth of the euro zone will drag on over time, since the loss of potential growth would end up translating into a loss of influence and international weight of the eurozone.

However, for Guindos this "fundamental" problem does not depend on monetary policy, since this medium-term growth depends on economic reforms and how the markets work, including more economic integration in Europe, where the integration has not yet been completed. banking union and there is no capital market like the United Kingdom or the United States, while in the internal market national approaches still remain above integration approaches.

"That during the next five, six, seven, eight, five years, growth in Europe is even below 1% on average would show that there are structural problems," he warned.

Despite these problems and the advantages of economies like the United States, Guindos has defended the advantages that the diversity of the eurozone also has, as well as the European social contract.

"I think that ultimately, with the tweaks and productivity improvements that have to do with investment, that have to do with digitalization, that have to do with the green economy, I believe that from a social point of view, political, the market, the European model is superior," he added.