The scenario of stagnant inflation in the German economy is visible, which is the worst possible at this time. Extremely worrying are the data for the German economy for the fourth quarter of 2021. In fact, the forecast of Trust Economics (https://trusteconomics.eu) is that, if the problem of the pandemic continues and Q22022 the next recession is ahead at the gates, with all that that may mean for the whole of Europe. And this, despite the impressive figures for the economies of France and Spain.
In particular, the Statistical Office of Germany announced on January 28, 2022, that the GDP of the largest economy in the Eurozone shrank by 0.7% between October and December. Compared to the corresponding quarter of 2020, when the pandemic hit Germany even harder, the increase reached only 1.4%.
According to Thanos Chonthrogiannis, chief economist and CEO of Trust Economics, the slowdown and, most likely, the contraction is likely to continue in the first quarter of this year. Thus, according to the definition of economists, the two consecutive quarters with a negative sign will mean a new period of recession.
The consequences of “Omicron”
It is recalled that the previous such period was recorded in early 2020, with the outbreak of the pandemic – something that, after all, happened throughout Europe and the planet. However, it seems that even today things are not going well, something for which the “Omicron” variant is undoubtedly responsible.
The extremely large number of new cases observed today is slowing down the German economy. The Omicron outbreak in China and the Chinese government’s efforts to control it with severe lockdowns and unit closures are likely to have negative consequences for Europe.
In each case, they have seized it, despite obstacles we can scarcely imagine. ” At the same time, it seems to confirm Christine Lagarde’s refusal to immediately raise interest rates and lift the ECB’s quantitative easing program.
Optimistic messages from France – Spain
At the same time, however, the performance of both France and Spain – second and fourth largest in the Eurozone – was impressive for the same period. Specifically, in the first, GDP grew by 0.7% in the fourth quarter of 2021 and, thus, the growth rate for the whole year was 7%, which is the highest recorded since 1969. And that, Undoubtedly, this is something that Emanuel Macron can also use politically in the run-up to the April presidential elections.
As for Spain, the growth rate for last year was 5%, which is the highest since 2000. However, the government does not look satisfied, as it had set a target of 6.5%, after the big “dip” of 2020, when Spanish GDP had shrunk by 10.8%.
In essence, despite the contradictory data from different countries, Europe now has to look at another unfavorable scenario for its future: that of stagnant inflation, which is probably the worst of all at this stage.
