December 24, 2024

EU Commissioner Paolo Gentiloni says Europe must respond to defense challenges in Russia's war in Ukraine

Outgoing EU Economic Commissioner Paolo Gentiloni said on Saturday that the EU had managed to avoid the “dire prophecies” that had threatened its economy in recent years but still had to deal with Russia’s war in Ukraine and fragile trade ties with China.

In an interview with CNBC, Gentiloni said that the EU economy “generally has weak growth, but there are no dire predictions that we have heard in the past two or three years: recession, blackouts, divisions, the division of Europe before the Russian invasion.” Steve Sedgwick at the Ambrosetti Forum in Cernobbio, Lake Como, Italy.

Gentiloni is a former Italian Prime Minister who has served as EU Economic Commissioner under European Commission President Ursula von der Leyen since December 2019. legislation (such as tariffs), while the European Commission is responsible for the economic strategy and legislation (such as tariffs) of the 20 euro area countries.

Gentiloni will not serve again as commissioner after von der Leyen’s chaotic re-election as president, but he has outlined the economic outlook that awaits his incoming successor.

“The economy is growing slowly but still growing. When the epidemic occurs, the risk of divisions between the EU is very limited,” he noted. “The bad part of this story is that if we don’t improve our capabilities in terms of competitiveness, if we don’t Huge progress has been made on the so-called Capital Markets Union, and if we don’t solve the defense challenge… If we don’t do that, then the new situation in the world will look very difficult for Europeans.

Europe, recovering from the Covid-19 pandemic, has been struggling with a cost-of-living crisis and a high-inflationary environment, exacerbated by energy supply constraints following Russia’s February 2022 invasion of Ukraine and sanctions on Moscow. The euro zone economy expanded in the first half of this year, with preliminary data showing that gross domestic product grew 0.3% in the three months to the end of June from the previous quarter, better than expected.

in spring forecastThe European Commission predicts that the EU’s GDP will grow by 1% in 2024, and the Eurozone’s GDP will grow by 0.8%. The GDP of the two regions will grow by 1.6% and 1.4% respectively in 2024. Broader geopolitical risks arising from ongoing conflict.

Amid declining inflation, the European Central Bank took its first step in easing monetary policy since 2019 in June, lowering the central bank’s key interest rate to 3.75% from a record level of 4% since September 2023. The market has fully digested the impact of another interest rate cut at the upcoming meeting of the European Central Bank on September 12.

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—CNBC’s Katrina Bishop contributed to this report.

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