The governor of the Bank of Spain, José Luis Escrivá, has warned of a context “extremely” uncertain for the economy mainly by the commercial war climbed by the president of the United States, Donald Trump. From an optimistic point of view, Escrivá considers that it is an opportunity to boost “European construction”, even to promote an “approach to the United Kingdom.”
In a speech in the ‘Chair of the La Caixa Foundation’, the governor and former minister has said that the current uncertainty is much more diffuse than ever, and that “the prescription is to be cautious and gather information.”
The governor has used the uncertainty index of world economic policy, which elaborates The Group of Academic Economic Policy Uncertainty (EPU) and that is at maximum since it is calculated. This indicator has helped him to emphasize that the doubts for “the decision makers” currently exceed those that were “in the pandemic, or after 11-S”. This EPU index takes the press of the press from 21 countries, including Spain, together with the rest of the great economies. That is, it reflects the holders of doubts and risks that have been extended by the main general and economic newspapers around the world.
In addition to the tariff uncertainty, Escrivá has listed other threats, such as those that come from exchange policy – for the effect of currencies on the tariffs themselves, as explained in this information; as the regulatory ones – due to the kick to the commercial and geopolitical board of Donald Trump -, and, finally, such as those that have to do with European security.
Regarding the investment increase plans raised from Germany and the whole of the European Union (EU) to respond to this risk, the governor considers that it implies a new era for fiscal policy, which will be more expansive. For example, as projected, you could shoot the debt ratio against German GDP from 60% to 100%.
Given this new reality, Escrivá has assured that “a rethinking of EU fiscal rules will be produced in the face of future investment challenges”, together with “a community regulatory simplification” and an acceleration of the digital euro project.
In this scenario, the governor of the Bank of Spain has highlighted the privileged position of our country, and the economic growth differential of recent years and is maintained for this exercise. Of course, he recalled that the forecasts are currently fully subject to the uncertainty he has commented on the start of his speech.
Among the strengths of Spain, Escrivá has influenced the positive behavior of the labor market. In addition, in a context of intensification of migratory flows, “there is a greater increase in the average educational level of immigrants in Spain,” he said.
Another key factor, according to the governor, is that Spain has “lower energy prices”, thanks to renewable energy investments. He has also insisted on one of the great structural changes in our economy, the growth of exports of non -tourist services, for the rise of the branches of information and communications, professional, scientific and technical activities or education.
Of course, the ‘boom’ of trans tourism Pandemia has been and is another of the great economic advantages of Spain. “Consumer preferences seem to have oriented services rather than goods, which has resulted in an increase in tourism in Mediterranean countries,” he said.
Finally, “the Spanish economy would be less exposed to tariff risks, for its lower exposure to the United States, and a commercial balance near balance.” Among the challenges to be “correct”, the housing problem is one of the most urgent, because it can mean “a bottleneck for the labor market,” he concluded.
Lagarde warns of the risk of stagnation of the Eurozone
Last week, the president of the European Central Bank (ECB), Christine Lagarde, warned that US tariffs will drag the eurozone economy to stagnation.
Before the Commission for Economic and Monetary Affairs of the European ParliamentLagarde said that the commercial war “is evolving, and any estimate is subject to considerable uncertainty.” Although he dared to affirm that “the ECB analysis suggests that an 25% American tariff on imports from the EU would reduce growth [del PIB] of the Eurozone in approximately 0.3 percentage points during the first year ”.
In addition, he added, “a European response consisting of increasing tariffs on US imports would further increase this figure, up to approximately half a percentage point.” The provision of GDP progress (gross domestic product) of the whole of the euro partners is currently 0.9%, after the cut of two tenths in early March from the previous expectation of 1.1%.
“Most of the impact on economic growth would be concentrated around the first year after the rise in tariffs; subsequently, it would decrease over time, leaving, however, a persistent negative effect on the level of production,” explained the president of the ECB.
“Allow me to emphasize again that these estimates are subject to very high uncertainty, since the impact of tariff increases can be non -linear, for example, due to a significant reconfiguration of global supply chains. Of course, the high level of political uncertainty forces us to stay alert and prepared to act and protect price stability,” he continued.
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