Revised data from the statistics agency Eurostat show that the eurozone has entered a recession. An expected growth of 0.1 percent in the first quarter was changed to a minimal contraction of 0.1 percent, and then economist Edin Mujagic saw something very strange happen: ‘then a kind of grave mood prevails, because we are in a recession. But if it were 0.1% to the right of zero, we’d be glad we didn’t have a recession, when it really doesn’t matter.’
More importantly, according to Mujagic, the economic situation looks “heavy” for many people, and this small adjustment by Eurostat won’t change that. ‘For a lot of people it doesn’t feel good, so it doesn’t matter if we’re formally in a recession or not. Even if we had had 0.1 percent growth, life would still be as difficult for many people as it has been in recent months.’
Moment of reflection
Furthermore, the revised figures from Eurostat came as no surprise to Mujagic. For example, we already knew that the German economy, the largest in the eurozone, contracted in the first quarter of this year. And a few weeks ago, Statistics Netherlands already reported that the Dutch economy lost 0.7% in the first three months. “It’s going badly, and I fear it will get worse,” said the economist. According to him, the fact that it “doesn’t feel good” for people may have more to do with high inflation than disappointing growth, “but that’s not helping that growth.”
Incidentally, Mujagic thinks it’s not too bad for our overheated economy to be in a mild recession for some time. ‘An economy can’t just grow, every now and then you need a moment of reflection, a momentary pause. This is a recession, don’t tell horror stories about it. It’s part of the job, and in the long run, the economy will only benefit.’
Cause and effect
DNB chairman Klaas Knot also calls for a break, but in the area of ​​salary increases. He warns that a ten percent increase in wages, demanded by the unions, will have serious consequences for inflation.
But according to Mujagic, the central banker reverses cause and effect, which he has seen more often with central bankers lately. The ECB has failed to deal with inflation for two years. So people lose faith, play it safe and demand compensation for their people. So it’s not the unions’ fault, it’s the ECB’s fault which intervened too late, too slowly and too little.’
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.
