Commission Vice-President Rehn exaggerates Eurozone’s growth prospects

Press conference by Olli Rehn, Vice-President of the European Commission, on the autumn economic forecasts for 2013-2015. (EC Audiovisual Services, 5/6/2013).

Press conference by Olli Rehn, Vice-President of the European Commission, on the autumn economic forecasts for 2013-2015. (EC Audiovisual Services, 5/6/2013).

Yesterday the European Commission published its autumn 2013 economic forecast for the EU and the Eurozone. Apart from downgrading the growth prospects in relation to last spring projections, Ollie Rehn, Commission vice-President, while presenting the package, used slightly different estimates than the ones contained in the full report prepared by the Directorate-General for Economic and Financial Affairs (DG ECFIN). Rehn, in rounding up the numbers, tried to ameliorate Eurozone’s horizons ‘playing’ with percentages.

Starting from the improvement of prospects, the full DG ECFIN report says, “GDP in annual terms is expected to remain unchanged in the EU and contract by ½% in the euro area in 2013… Next year, economic activity is projected to expand by 1½% in the EU and 1% in the euro area before accelerating to 2% and 1¾%, respectively”. In contrast, Rehn while presenting the forecasts said that, “GDP in annual terms is expected to remain unchanged in the EU and contract by 0.4% in the euro area in 2013… In 2014, economic activity is projected to expand by 1.4% in the EU as a whole and 1.1% in the euro area. We expect a further acceleration in 2015 to 1.9% in the EU and 1.7% in the euro area. Then he added, “This confirms our projection from May this year”.

Multiple blunders

In just one sentence, the Finnish Commissioner made many blunders. Let’s count them. First and more importantly, he didn’t inform his audience that in the spring forecast, presented also by him last April, the projection for next year’s growth was 1.2%. Yesterday, he said that this figure had to be contracted to 1.1%, while the full DG ECFIN report predicts just 1% more GDP for 2014.

This criticism is not a scholastic approach to numbers. The reason is very simply that 2 decimals of a percentage unit of Eurozone’s GDP correspond roughly to €19 billion. Eurozone’s annual GDP is estimated at €9.5 trillion. To put things right, last spring the Commission predicted 1.2% growth for 2014, now Rehn cuts it to 1.1% and the just published full autumn report of DG ECFIN authentically undercuts it further, to only 1%.

Discrepancies between Rehn and DG ECFIN are noticeable for this year’s prospects too. While Rehn said that Eurozone’s GDP will contract by 0.4% this year, the authentic forecast of DG ECFIN predicts ½% retreat in 2013. Actually, in this case the Commissioner didn’t go for a rounding of numbers. On the contrary he chooses to undercut a perfectly rounded half percentage unit. Again this criticism is not a miser presentation of decimals. Not to forget that each decimal of a GDP percentage unit roughly represents €9.5 billion. This should be enough for Rehn to make him pay attention to numbers.

Facts is the enemy

Unfortunately, it seems that Rehn did not mistakenly use a different version of numbers. He invariably tried to sweeten the prospects. On both occasions, predicting Eurozone’s GDP for this year and next year, he chose to promote a better perspective than the DG ECFIN. He either doesn’t agree with the ability of his services for accurate predictions, or he is so negligent that he doesn’t care about some euro billions.

In any case, the truth is that this autumn’s forecasts are worse than last spring’s. Obviously the austere fiscal and incomes policies followed invariably by over-indebted and surplus countries alike are still taking their toll. On top of that, the widely self-imposed deleverage in the entire banking industry and the households keeps on negatively affecting the growth prospects of Eurozone. As for the widely advertised Eurozone’s passage from recession to growth as from the second quarter of this year, DG ECFIN predicts a mere 0.5% increase of GDP during the second half of 2013.

It seems that Rehn by choosing ‘slightly’ different numbers than the DG ECFIN, in reference to growth predictions, wanted yesterday to communicate at least one tangible positive perspective for Eurozone. Unfortunately, prospects are negative if not dangerously frustrating on all the other major macroeconomic variables, like unemployment and consumer price developments. According to this EU Commissioner “growth will pick up only gradually and will translate into jobs only with a lag”. Later on he also accepted that the “most recent data indicate that we will likely see an even lower rate of inflation in the near term”.

Unemployment is at the historical high level of 12.2% and inflation at the unseen before low percentage of 0.7%. Sadly enough, those two crucial variables are set to continue their course towards the wrong direction. Unemployment will probably continue to rise and inflation to surely slide towards zero. These quite negative prospects, together with information about fast falling industrial goods’ prices in Eurozone, paint a grey horizon. In conclusion, it is questionable if Eurozone will be able to justify the predictions for 0.5% growth in the second half of this year and the 1% rise of GDP during 2014.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

This is how a smart factory actually works

4 bold new ways New York is going clean and green

Why businesses are nothing without strong human rights

These are India’s cleanest cities

70 years on, landmark UN human rights document as important as ever

Greece: Tsipras’ referendum victory does not solve the financial stalemate of the country and its banks

Trump’s Syrian hit the softest option vis-a-vis Russia

The race for Driverless vehicles: where is the industry heading?

Syria: Civilians bear brunt of unilateral sanctions, exacerbating ‘unparalleled suffering, destruction,’ says UN expert

Working when sick is rising and harms you and your employer. This is why

Methane levels are increasing – and scientists aren’t sure why

2019 EU Budget: Commission proposes a budget focused on continuity and delivery – for growth, solidarity, security

These are the cities where people work the longest hours

How next-generation information technologies tackled COVID-19 in China

Commission assesses and sets out reform priorities for the countries aiming to join the EU

Statement of the UK Coordination Group and the leaders of the political groups of the EP

Recovering from COVID-19: these are the risks to anticipate now – before it’s too late

EP Brexit Steering Group calls on the UK to overcome the deadlock

UN, African Union make significant joint commitment to global health

EU Trust Fund for Africa: Can it be beneficial for Italy and tackle the migration crisis in the Mediterranean?

Four things the UN chief wants world leaders to know, at key COP24 climate conference opening

In Pakistan, Guterres urges world to step up climate action, praises support to Afghan refugees

Three ways to improve your corporate culture in the #MeToo era

Why do medical students seek for work abroad?

Why youth unemployment is so difficult to counter

Foreign Investment Screening: new European framework to enter into force in April 2019

Attack on Saudi facilities risks dragging Yemen into ‘regional conflagration’: UN Envoy

UN chief calls for Security Council to work with Myanmar to end ‘horrendous suffering’ of Rohingya refugees

UN makes ‘declaration of digital interdependence’, with release of tech report

Western Sahara: a ‘peaceful solution’ to conflict is possible, says UN envoy

The European Union’s Balkan Double Standard

“Let hope be the antidote to fear” – Today’s WHO briefing and other key Coronavirus updates, tips and tools

Humanitarian Aid: €10.5 million for South and South East Asia

How fixing broken food systems can help us meet all the SDGs

5 Ways Companies Can Progress More Women into Leadership Roles

New Report Offers Global Outlook on Efforts to Beat Plastic Pollution

Coronavirus: the truth against all myths

‘Historic’ moment: Palestine takes reins of UN coalition of developing countries

Four things Turkey did for business in the G20

UN space-based tool opens new horizons to track land-use on Earth’s surface

Address by the President Antonio Tajani at the funeral of Nicole Fontaine

When is necessary understand the cultural marks in health-disease process

UN chief commends African Union on adoption of institutional reforms

There is no recipe for a healthy mental state

Is Eurozone heading towards a long stagnation?

Here are three ways Africa’s youth are defeating corruption

How we overhauled healthcare amid Venezuela’s crisis

South Korea wants to build three hydrogen-powered cities by 2022

UN rushes to deliver aid as key Yemeni port city is ‘shelled and bombarded’

How India’s globalized cities will change its future

Industrial producer prices on free fall and stagnant output

Across Europe, people are struggling to make ends meet. We need a common response immediately.

Coronavirus: urgent response to support citizens, regions and countries

Africa-Europe Alliance: first projects kicked off just three months after launch

Millennials aren’t voting – but these young leaders have a plan to change that

Remittances could fall by $100 billion because of COVID-19 – here’s why that matters

Although Greece is struggling to pay salaries and pensions Varoufakis is “optimistic”; the Sting reports live from EBS 2015

European Semester Winter Package: assessing Member States’ progress on economic and social priorities

Beyond trust: Why we need a paradigm shift in data-sharing

UN condemns deadly attack against G5 Sahel force headquarters in Mali

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s