You did not like this week the announcement of a big brake of the European economies.
Indeed, and it is in Germany that this phenomenon is the most spectacular. While this country had experienced 9 years of uninterrupted growth, we have just learned that its economy was now virtually at a standstill. It was in the second half of 2018 that this slowdown was felt. This summer, the German economy has even retreated, and it finally avoided just the recession last fall. In total, growth will have been about 1.5% last year, but this honorable figure is an average. And the current reality is frankly disturbing ...
And since Germany is the most powerful country in Europe, I suppose this poor performance pulls everyone down.
Absolutely. Since our economies are totally intertwined (and we see it at the moment with Brexit and the chaos caused by the break-up of British ties with the rest of Europe), what affects one country affects the others. And everyone undergoes and feeds at the same time and the tendency of others. It is a negative cycle that affects all of Europe. Industrial production is falling in Spain, Italy, Great Britain, exactly as in Germany.
And in France, of course ...
Yes, of course, we do not escape. Germany is our first customer and first supplier. We can not stay out of business, and our industrial production has also fallen dramatically.
And we know the causes of this stunt?
Let us say that there are causes common to all countries: we are at the top of a cycle, as we say in economics. The economy is not static. Growth, by definition, is a movement. And this movement is not linear. There are waves, sometimes very weak, sometimes very strong. In Germany, the wave has been strong and positive for 9 years, I said, and well, we begin a reflux of the wave, like a tide down.
And then, there are causes particular to each country. In Germany, kingdom of the car industry, the new environmental standards have caused a lot of production problems. In France, it is the "yellow vests", whose long-term action has slammed the economy.
And of course, if all economies are interconnected, does that mean that it is slowing down elsewhere than in Europe?
Absolutely. It is in China that it shows the most: this economy should grow by only 6.5% this year, which is a bad performance. To get out of poverty hundreds of millions of Chinese, to develop, to finance the construction of roads, cities, equipment, this country needs more growth. However, he has several difficulties. First, the auto market, which is also slowing down sharply (we are moving from a first-time buyer to a partly-renewal market, and it is less buoyant). And then there is the trade war launched by Donald Trump.
And precisely, the United States also slow down?
Not yet, no: Trump has taken a lot of tax measures that boost the US economy. But we must not make any illusion: by promising to close its market and set up customs barriers, it puts right the economy of his country in danger of growth.