China News Service, Beijing, February 15 (Zhang Wenhui, Cao Xufan) Data from the European Union's statistical agency Eurostat show that the euro area economy experienced zero growth from October to December 2023. In the three months before that, the euro area economy shrank by 0.1%. Recently, the European Commission issued a report, lowering the economic growth forecast for the EU and the Eurozone in 2024 from 1.4% and 1.3% to 1.3% and 1.2% respectively.
"The economic situation in Europe in 2024 is not optimistic, and overall it is in a relatively sluggish state." Wang Shuo, a professor at the School of International Relations at Beijing Foreign Studies University, recently pointed out in an interview with a reporter from China News Service that Europe's economic development will face four challenges in 2024.
One is the geographical challenge. The geopolitical environment currently facing Europe is relatively complex. The crisis in Ukraine is still ongoing, the Palestinian-Israeli conflict has re-emerged, and the situation in the Red Sea is complex, which has a great impact on Europe's external economic environment. "Europe is one of the biggest victims of the Ukrainian crisis, but it is helpless that it is difficult for Europe to influence the direction of the Ukrainian crisis. The impact of this geopolitics on the economy will become further apparent as the crisis continues."
The second is the political challenge from Europe itself. The situation in this year's European Parliament elections may change significantly, and the conservative party may rise from fifth place to third or even second place. The rise of populism will change the European political landscape. Political populism and fragmentation will intensify, which will also greatly affect political stability and the rationality of government policies.
The third is challenges at the social level. Currently, farmers in many places in France are launching protest movements; in January, a general strike occurred on German railways. Frequent strikes and demonstrations reflect the unrest in European society, and behind it are not only political issues, but also economic issues. Public dissatisfaction with the government will greatly restrict the government's ability to act on policy.
The fourth is the challenge of macro policy regulation. Although the current situation in Europe has eased compared to last year, for example, the inflation rate in the Eurozone dropped from close to double digits last year to 2.8% in January this year, there are still recurrences. This reflects that efforts to curb inflation continue to play a role, but as the external economic environment changes, the effect is still uncertain.
Wang Shuo further analyzed that if a looser monetary policy is implemented in this case, it will be more difficult to control inflation repeatedly. However, if interest rates are not cut, high interest rates for a long time will inhibit consumption and investment and inhibit economic growth. For the European Central Bank, whether to cut interest rates depends on internal and external conditions, especially the pace of adjustment of the Federal Reserve's monetary policy. "So, Europe is facing very great economic pressure or challenges this year." (End)