Eurostat revised European inflation data this week. France and Italy left the estimate substantially unchanged. But the figure in Germany has been significantly revised downwards. 0.2 to 0.4 percent shrinkage,’ says BNR in-house economist Han de Jong. “I’d say plus 0.1 goes to zero or minus 0.1.”
Not only Germany but also Ireland had to adjust the figure. And not a little: from a growth of 3.5 percent to a growth of 0.3 percent. De Jong explains this abrupt adjustment on the grounds that the Irish economy is very different from the rest of Europe.
Ireland is home to many large companies, especially the European Headquarters. ‘Then you have to think about Apple, Google, PayPal, but also the pharmaceutical sector and, for example, aircraft leasing. The sectors dominated by these multinational companies account for more than half of the total value added of the Irish economy.’
So you have to take such a figure with a grain of salt.
And that’s hard to measure, which is why GDP isn’t really a good measure of the Irish economy. “That means you have to take a figure like that with a grain of salt. Naturally, GDP remains an important benchmark. But there are also big disadvantages,’ says De Jong.
Purchasing power
Based on the Central Planning Bureau’s report, De Jong concludes that the Dutch economy performed better than expected last year. “And even better than the neighboring countries.” But will it stay that way? De Jong expects a sharp decline in the inflation rate, “close to 4.5% inflation for the full year”.
According to De Jong, purchasing power could be better than expected this year if inflation falls as wages accelerate.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
