For the risk of a “negative demand shock” because of the sweeping duties that US President Donald Trump announced warns, as part of an interview with Financial Times, Greece’s central banker, Giannis Stournaras.
THE Mr. Stournaras referred to potential impacts In Europe’s economic growth, as a result of the world -wide trade war, in the wake of the US duties imposed by the US. “A remarkable negative impact on growth could lead to greater than expected weakening of (economic) activity, captivating inflation lower than our goals,” he explained.
Mr Stournaras warned that the eurozone is facing this shock at the time when the prospects for growth were already weak and inflation was heading for the 2% in the medium term, set by the European Central Bank. The ECB’s next decision on interest rates, which is related to inflation, is expected on April 17th.
THE President Trump announced last week that Washington It will impose a 20% duty on most European products imported to the US, which are the largest market for European products, with a total share of 21% of EU exports in 2024. The imposition of even higher tariffs on Chinese products pushes analysts to predict the re -ientation of Chinese exports to Europe. Inflation.
In view of the announcements Trump on duties last week, the ECB It had reported the possibility of suspending the rate of reduction of interest rates after the sixth reduction by mid -2024 to 2.5%.
ECB President Christine Lagarde said in March that inflation could increase by 0.5% under this trade war “because of EU retaliation and a weaker euro equality”.
On the contrary, Mr Stournaras estimated that “duties are certainly a deflationary measure” for the eurozone. He stressed that the US protective measures are “worse than expected” and that they create a “unparalleled” degree of “global uncertainty (in terms of marking) policy”, which is burdened with economic activity.
Asked if the situation would justify interest rates by 50 basis points, Mr Stournaras refused to comment.
Although it remains difficult “the exact prediction of the impact of the duties”, their imposition “could” reduce “from 0.5% to 1.0%” the growth of the eurozone. The ECB announced in March that it revised its worse growth in the eurozone growth at 0.9%.