Growth for entire Eurozone expected
In its latest economic forecast the EU Commission predicts growth for all EU member states for the first time in ten years. GDP is expected to grow by an average of 1.6 percent this year and by 1.8 percent in 2018. Is this a sign that the Eurozone is emerging from its crisis or is the Commission refusing to accept reality?
Commission is breathtakingly naive
The EU Commission can only be so optimistic because it is ignoring all the latent risks in the Eurozone, taz criticises:
“Just one example: the banks are sitting on bad debt to the tune of around a trillion euros, so a banking crisis could occur at any time. Italy and Greece are particularly at risk. Moreover, the growth has been inflated artificially: because Draghi is keeping interest rates low the euro exchange rate is also very low, which is making European goods cheap on the global markets and giving exports a huge boost. But these correlations are being ignored by the EU Commission, which prefers to dream of rising interest rates instead - and wants to increase austerity in crisis-stricken states. The argument for taking this course is breathtakingly naive: the growth shows that the deficits can be reduced. If Brussels gets its way a recession will be inevitable. The euro crisis will reignite.”
Italy becoming the biggest risk
The publication of the economic forecast has also left Il Sole 24 Ore sceptical given that things don't exactly look rosy for Italy, which is expected to register 0.9 percent growth this year and 1.1 percent in 2018:
“With a combination of low growth and high government debt Italy is one of the weakest economies in the Eurozone and the EU. This is why people in Brussels are convinced that Italy is not doing enough to get out of the mess it manoeuvred itself into. If you add to this the continuing tensions and fluctuations on the financial markets, Italy looks increasingly like a doubtful case. Whether we like it or not, Italy, which performed miracles on the export front, can't hope to wriggle its way out of responsibility this time. … The Commission's growth forecasts are further confirmation of a crisis that has become a permanent state and is therefore all the more dangerous.”