In times of great uncertainty, Europe should replace thoughtfully

“The protectionist measures announced or implemented by the US president are by no means good news for Europe, as well as for the whole world and for America in general. In the long run, we can expect universal negative effects at least in theory.

As for Europe, it is difficult to serve with concrete forecasts. For now, all our analyzes indicate a very large range of predictions. The models we have are based on data from the recent past when there were no such measures in the world at all. We last had such a large wave of protectionist measures before World War II, « Trump’s customs Governor of the Bank of Slovenia sees Primož Dolenc.

“Certainly, protectionist measures have a negative impact on economic growth, but we do not yet know how to have effects on inflation. On the one hand, higher customs can lead to higher inflation, and on the other, lower economic growth can cause disinflation. What will be the final effect, we do not know, but we will take this into account in our future decisions. « In his estimation, » Europe will undoubtedly respond with some measures, which will need to be considered very well, perhaps in the light of any diplomatic conversations. « 

When asked Workwhat new geopolitical, credit, business and other risks bring Trump’s measures, Dolenc explained that the Bank of Slovenia will publish a financial stability report in 14 days. « For the time being, the assessment of our risks for financial stability remains relatively favorable, the banking system is stable, well -capitalized and liquid, but some potential or actual effects of deterioration are already shown, and more will be told when reporting reports. »

We are in very uncertain times

“This is a big turmoil for the European and the world economy. From the point of view of the Slovenian economy, this direct effect will not be so powerful, but the indirect effects will be extensive, depending on the further actions on the Union side. It will be necessary to act here really coordinated and thoughtful in the retaliatory measures, but of course it will have to respond, « estimates acting director of Umar Maja Bednash.

Maja Bednas: “It is uncertainty that most affects economic activity, especially investments and investment decisions.” Photo: Leon Vidic/Delo

As for the impact of customs duties on the economy, Umar made a « estimate with slightly different assumptions in the spring forecast, but about half a percentage point lower economic growth could be due to these measures within one year. This also has the effects of customs duties, but uncertainty is the one that most influences economic activity, especially investments and investment decisions. We are in very uncertain times. All activities that are more involved in chains of value and more exposed to trading with America are more exposed. However, it is difficult to estimate the sectors because the situation is very complicated. « 

Europe must act calmly, with the right countermeasures

“We wait for the American customs duties and do not jump into the abyss, even if anyone drags us into it. In some areas, after Trump’s moves, it is already shown that they are much more damaging to the US customers and the US economy. The exchange there reacted, and inflation growth, including a recession, is expected. Therefore, it is good before we are overburdened to wait for the final effect of this. I believe that the consequences of these moves on the US economy will sooner or later pour US decision makers. The EU must therefore act calmly, selectively, with the right set of countermeasures and wait for the world to come to mind again, « says State Secretary at the Ministry of Economy Matevž Frangez.

Matevž Frangež: “In response to US customs, let’s wait and not jump into the abyss, even if anyone drags us into it. » Photo: Leon Vidic/Delo

In Slovenia, he estimates that the automotive industry is the most exposed « because of strong integration into the European industrial chains, and the US is an important market for the European automotive industry. Customs are expected to affect it. But let’s not forget, the EU is the market with the highest purchasing power in the world, has a population of 450 million, 29 million companies, and may need to decide on its wallet with a little more patriotism. « 

If customs pours into finished products will again inflation

The total exports of goods from the EU in the USA accounted for about three percent of the EU domestic gross product last year, and in terms of value added, the share was approximately 1.5 %, he said to the media statement Bojan IvancChief Economist of the Chamber of Commerce and Industry. « From a macroeconomic point of view, therefore, there is no greater risk of falling into the recession due to these effects, but there is certainly a danger in terms of how other countries will respond to customs, » he said.

Bojan Ivanc: « From a macroeconomic point of view, there is no greater risk of falling into the recession due to these effects, but there is certainly a danger in terms of how other countries respond to customs. » Photo Leon Vidic/Delo

According to him, the challenge for Europe could be primarily a highly increased import from Asia, for which the second most important market is for the US. Therefore, Europe may have to intervene over time in certain customs to protect production on European soil. If these customs were then poured into the final prices for consumers, then this would encourage inflation again, he noted.

The advantage of Europe is the internal market

“This is a concussion in the world economy. It is too early to assess what the impact of customs will be on Europe. However, they will certainly have an effect on the US economy, where, in our opinion, they will also have to evaluate what it means in the short and medium term for inflation pressure. Indeed, this will bring more jobs and growth in the US in a short time, but the medium -term effects of customs duties are much less known. They also say that they want to increase budget revenues with customs, but most of them will be paid by people in America. Customs are a very big change for Europe and now we are still assessing what the consequences will be and what our answer should be, « says the European Economist of the European Investment Bank Debora Revoltella.

Debora Revoltella: “Customs are a very big change for Europe and now we are still assessing the possible consequences and what our answer should be.” Photo Leon Vidic/Delo

According to her, “it is good that there are many conversations among the Union members and that we have a common assessment of the consequence. This is very useful, as one of the advantages of Europe is a great internal market, its integration and the answer to the global challenges, as we have witnessed now. Therefore, it is crucial that we continue to work in the internal market and competitiveness of Europe. This also increases the resistance of euro companies.  »