Schnabel (ECB) does not rule out that the eurozone enters a technical recession


signal that a. point to eurozone growth slowdown According to the German representative on the board of the European Central Bank (ECB), they open the door for the region’s economy to enter a technical recession, while inflationary pressures will probably take some time to dissipate. Isabella Schnabel,

“A strong indication that Growth is going to slow down and I won’t deny that we are entering a technical recessionEspecially if Russia’s energy supply becomes further disrupted,” the German economist warned in an interview with Reuters.

In this regard, Schnabel has pointed out that downside risks to economic growth in the euro area are also exacerbated by additional shocks on the supply side, leading to dry or low water level in the main rivers.

As such, despite the fact that the economy has shown its ability to adapt, the German has indicated that the ‘shock’ of energy prices is “too good to fully compensate”, although it has emphasized that There is diversity among euro countries and it seems that, among the larger countries, Germany most affected,

Despite the expected decline in activity in the euro area, Schnabel has assured that he “sees no signs of a protracted and deep recession at this time”. “It is also unclear whether a technical recession is going to occur in the euro area. I won’t rule it out,” he said.

With regard to inflation, Germany’s representative on the ECB board has stated that it is likely that Strong inflationary pressure to continue for some time And that they do not disappear quickly.

“Even with monetary policy normalizing, it will take some time for inflation to return to 2%”, he acknowledged, while adding, It cannot be ruled out that inflation will increase further in the short term.

In this sense, although most references on long-term inflation expectations remain around 2%, the Germans caution that a range of indicators point to a higher risk of disruption. “I think it’s very important that we take these signals seriously,” he says.

Also, given the difficulty of predicting when inflation will peak, economists have defended the importance of Give more importance to real inflation data in ECB’s monetary policy decisions,

As such, in view of the ECB’s Governing Council meeting next September, Schnabel has suggested a favorable position for the unit to return. act decisivelyAs he argues, given the most recent figures, concerns that existed in July, when the central bank decided to hike the rate by 50 basis points, “have not been mitigated”.

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