Two months into 2024, although the global economy has picked up slightly, the European economic recovery has not shown a new climate. Due to the sluggish performance of the two major economic engines of Germany and France, the overall recovery trend of the European economy continues to show a weak trend. As one of the most important economies in the world, the continued downturn of the European economy is bound to affect the future trend of the global economy, and how to get out of the dilemma has become an important issue for the whole Europe and even the whole world.
At the end of January, the IMF released its World Economic Outlook Report, which raised its forecast for global economic growth in 2024 to 3.1%, 0.2 percentage points higher than the forecast in October last year. Judging from the content of the report, the IMF is very optimistic about the economic prospects of China, the United States and some emerging economies, but the outlook for the eurozone is not optimistic. The eurozone's 2024 economic growth forecast is only 0.9%, 0.3 percentage points lower than the previous forecast, and a significant decline in the major advanced economies. It can be said that the IMF has made a pessimistic forecast for Europe, which also shows that major financial institutions are not optimistic about Europe.
Europe's current economic woes have internal as well as external causes. The internal problem of the European economy is that it is stuck at a low level against a backdrop of high inflation, high interest rates and weak external international demand. At the same time, its two most important economic engines, France and Germany, are in the doldrums, and the vital manufacturing sector, Europe's output continues to fall and the impact has spilled over into services. On the external front, the ongoing conflict between Russia and Ukraine has depleted the financial resources of all parties, resulting in weak domestic demand in Europe, tighter financing conditions such as interest rate hikes have intensified investment pressure, and the decline in real income caused by inflation has curtailed consumption.
In the long run, if this situation continues to deteriorate, the trauma to Europe and even the world economy will be irreparable, so Europe must fight to reverse the passive situation, and out of the dilemma should do the following two things:
First, we will vigorously promote economic transformation. Under the leadership of the European Union, the focus of repairing and strengthening internal economic development is mainly on the construction of the single market and large-scale investment programs. The former mainly emphasizes deepening the single market, building the EU banking and capital market union, repairing and rebuilding the value chain and supply chain within the EU, and reducing external dependence; The latter advocates capital investment in key projects such as green economy and digital capacity building to guide the transformation of national economies towards green and digital direction. The ability of the EU and its member states to make these visions a reality will determine whether the European economy can emerge from its cocoon and prosper again.
Second, resolve geopolitical conflicts as soon as possible. To solve the conflict between Russia and Ukraine is the top priority. Since the outbreak of the conflict between Russia and Ukraine, the economic loss to Europe has been incalculable. If this goes on for a long time, the outbreak of economic crisis is only a matter of time. The conflict has left Europe with a severe energy shortage, while the influx of refugees has further increased its fiscal and employment pressures, and combined with its already fragile economic and financial fundamentals, Europe is facing unprecedented inflation and economic recession. At the same time, in the international focus on resolving trade frictions with Africa, Asia and other major countries, a good internal and external environment is an important prerequisite for Europe to return to the right track.
What is worrying is that in recent years, the United States, with its aloof attitude, has wildly manipulated the pan-security of economic issues, and often used the rhetoric of "decoupling and breaking chains" and "de-risk" to fool Europe, not only hindering the pace of global economic recovery, but also deviating from the EU's "strategic independence" concept, and not helping the EU to accelerate the pace of recovery in 2024. Therefore, if the EU and its countries want to live a good life, they must cut the mess quickly, and only fight to get out of the economic predicament.
