European Union Economic Commissioner Paolo Gentiloni stated that Europe’s economy faced inflation and oil spurts related to the conflict between Israel and Hamas, according to Bloomberg.
We have a weak economy, but we’re not in recession, and this is mixed news. If we think to what we were expecting one year ago, we were expecting a worse situation than the one we’re in.
Gentiloni claimed that the geopolitical impact of the military confrontation between Israel and Hamas could affect global trade, but added that the economic damage of the conflict was too early to assess.
We don’t see a major impact on oil prices for the moment, but this is of course increasing the uncertainty of the economic perspective.
The commissioner’s statements followed an IMF forecast showing euro zone growth would slow by 0.7 per cent this year and 1.2 per cent next year, which is below the EU’s own forecasts for the region. Brussels is due to publish a new review of estimates in November.
The EU economic expert noted that slowing inflation rates did not rule out the risk of a hike in oil prices.
What is important for all member states is to keep prudent fiscal policies. We can’t undermine monetary tightening with expansive fiscal policies.
The IMF warned this week that Italy would still have a debt burden exceeding 140 per cent of gross domestic product even after five years. The country’s huge debt is causing concern not only among investors, but also among officials in Brussels and Frankfurt, who have periodically called for a bailout amid market turbulence.
A senior Bank of Italy official warned this week that the Meloni administration’s borrowing plans would have unpleasant economic consequences.
