The ECB points to protectionism as the biggest risk for the European economy

The president of the European Central Bank (ECB), Mario Draghi, said today that the main risks for economic growth in the area of ​​the single currency are linked to the “threat” of greater protectionism , and urged the European Union (EU) to stay united and support global trade.

In his semiannual appearance before the commission of Economy of the Eurochamber, the head of the BCE indicated that “the uncertainties related to global factors”, in particular the protectionism, “have become more prominent”, although the risks for the growth of the eurozone “remain generally balanced”.

The institution expects growth in the area of ​​the single currency to be 2.1% in 2018 and moderate to 1.9% in 2019 and 1.7% in 2020.

Faced with the uncertainty abroad, Draghi called on the EU to remain “strong and united” and to support “multilateralism and global trade,” but warned that to have “success outside” the EU needs “strong institutions.”

The warning comes at a time of incipient trade war for the imposition of tariffs on European steel and aluminum by the United States, which has led Brussels to respond with its own tariffs and appeal to the World Trade Organization.

Draghi’s intervention before the European Parliament was also the first after the ECB Governing Council decided on June 14 to end its debt purchases at the end of this year and reduce them from October to 15,000 million euros per month .

However, they established that interest rates will continue at their current levels at least until the summer of 2019.

Draghi defended these decisions and stressed that the ECB “has confidence” that inflation will converge towards the goal of achieving a level below but close to 2% in the medium term and in a sustained manner even when it gradually reduces purchases.

“We think that the economy is strong enough to continue the expansion even though the asset purchase program has reduced its importance,” said Draghi, who stressed that they maintain their commitment to reinvest the principal of the bonds that are coming due for an extended period. of time after the end of acquisitions.

“We are not withdrawing the stimulus, monetary policy is still expansive and a large degree of monetary accommodation is needed,” insisted the head of the ECB, who asked “be patient, persistent and prudent” with a policy that has been “very effective” to boost growth and inflation.

On the other hand, Draghi called for strengthening the integration in the eurozone to make it less “vulnerable”, improve the confidence of the markets and continue the economic expansion.

In particular, he urged the creation of the European Deposit Guarantee System (EDIS), a pillar that is essential to complete the banking union but has been blocked for years by the mistrust of Germany and other countries to pay for the problems of banking in other states.

“We should not stop because of the distinction between risk reduction and mutualization of risks,” said Draghi, who stressed that European banks have strengthened their capital and continue to reduce bad loans and that risk sharing “greatly helps” their reduction. can online payday loans garnish your wages?

Draghi also requested that the firewall for the Single Banking Resolution Fund “be operative as soon as possible” and defended the creation of a mechanism to stabilize the eurozone economy, without pronouncing on what form it should take.

However, he warned that these measures will not be possible without “confidence among member states” and this requires that each one reinforce its economy.

Brexit to have limited impact

On the other hand, the president of the ECB said that the “brexit” will have a “limited” impact on “the short term” and on “aggregate” terms on the real economy in the European Union, although he admitted that it will affect some parts more than to others.

“In essence, it will depend on how it is managed,” Draghi said, questioned by the MEPs on the same day that two British ministers resigned in connection with the departure of the UK from the bloc.

In another vein, to questions from parliamentarians, Draghi reiterated that the institution does not currently see the risk of “bubbles” in the real estate sector and believes that virtual currencies do not generate “much risk” for financial stability because the exposure of the Eurozone banks to them “is not relevant”.

Macroeconomic indices raise concerns about the future of Tunisia

” political transition that has survived the asphyxia of the so-called “Arab springs”.

Wounded by unemployment and the precariousness of wages, the fragile Tunisian economy begins to accumulate disturbing macroeconomic indexes that threaten the only political transition that has survived the asphyxia of the so-called “Arab springs”.

According to a report signed at the end of November by the “Economist Intelligence Unit”, an independent section within the information group “The Economist” that offers forecasts and advice, the evolution of factors such as the CPI make investment in Tunisia highly risky .

And that, as experts warn, are “more than bad news” for a government in need of external money, also cornered by both the social deterioration and the painful bill imposed by the millionaire credit granted last year by the Monetary Fund International (IMF).

“The analysis of the quarterly indicators (between 2015 and 2017) allows us to draw five great lessons … on a macroeconomic situation that continues to be degraded, despite the efforts made and the supposed babbling beginning of the recovery”, explains the local analyst Asef Ben Ammar

The pessimistic view is based on the negative evolution that the aforementioned economic analysis platform has found both in the CPI and in other indices such as Industrial Production (IPI) and Production Prices (IPP).

The announcement of a fall in wages in the medium and short term

“The CPI shows galloping inflation, which is no longer decreasing, with a rate of inflation like that, the Tunisian economy sends a message of deterioration of purchasing power, a tendency to impoverishment of the middle class and probably the announcement of a fall in wages in the medium and short term, “he says.

In the same line, the negative evolution of the IPI shows a constant “deindustrialization” (-1.6% per year), while the fall of the PPI “announces a great erosion of the level of competitiveness of the Tunisian companies”.

To add to the concern are three factors: the collapse of the value of the national currency, the dinar, which in the last year has lost more than 20 percent of its value, making imports more expensive in a country in need of new technologies that it does not produce.

The increase in the trade deficit, which grew again in the first eleven months of this year to reach 5,400 million euros, a figure that is a negative record.

And as a consequence of both, the abrupt fall of the reserve of foreign currencies, which begins to threaten the capacity of the country to guarantee the payment of the loans and imports, and to face the public debt- info from Green-Touch.

In this context, the Parliament approved days ago a budget adjusted to the parameters of the IMF, which in exchange for the 2,500 million euros granted in 2016 require cuts and austerity policies that fall mostly on the public standing.

The IMF explained on Wednesday at the end of the visit its auditors made to the country this week.

A policy that also includes dismissals in the public administration to reduce the state invoice, raise taxes on the importation of various products and new tariffs among other painful measures.

“Sustained in their ambitious general budgets for 2018, the Tunisian authorities are committed to making decisive decisions,” the IMF explained on Wednesday at the end of the visit its auditors made to the country this week.

“The main challenge for the coming months is to eliminate the significant delays detected in lifting the obstacles to growth and attacking the large external and internal fiscal deficit,” he added.

The IMF has already delayed the second installment of the loans last summer to force reforms, but on this occasion he assured that the road seems clear.

According to the budget approved by the Chamber, Tunisia is committed to reducing the deficit to 4.9 percent of gross domestic product, from the 6 percent estimated at the end of this year.

In addition, it intends to abolish 20,000 jobs in the public administration, made up of 800,000 officials, to which must rise, however wages, due to pressure from the unions.

The ultimate goal in reducing public spending, calculated at 15 percent of GDP, one of the highest in the world – and subsidies, especially fuels and energy.

The measures have been taken, however, with a strong rejection by the unions and the employers, forces both with enormous power and influence in Tunisia.

The UGTT, the main trade union platform, has managed to stop some of these measures by strikes and mobilizations on the street, which it promises to repeat throughout 2018 to avoid cuts.

One of those strikes kept the Nawara gas pipeline, the largest in the country, in April, while a similar one on the island of Kerekena on the south coast caused the withdrawal of the British Petrofac.

In addition, it has paralyzed on several occasions the exploitation of phosphates in the interior region of Gafsa, one of the country’s main resources.

To the mobilizations and protests has also been added the employers UTICA, which like the UGTT received the Nobel Peace Prize in 2014 for the national agreement that saved a transition now again at risk.