The European Commission has release its Winter 2024 Economic Forecast. The current EU leadership appears to focus its economic goal on bankrupting Russia without any regard to energy prices or farmers. Does the report suggest that Brussels is succeeding?
The the past year and a half saw that the growth outlook for the European economy has been repeatedly revised downwards, while the Russian economic outlook has been repeatedly revised upwards.
The International Monetary Fund issued its most recent report at the end of January, increasing Russia's economic outlook from 1.1 to 2.6 percent. In parallel, the Commission's forecast published on Thursday revised the economic prospect for the EU from 1.3 to 0.9 percent.
In light of these revisions, it is absurd that the European Commission is working on the 13th and 14th sanction packages. The economic difficulty that the European Union has drifted into is largely the result of the sanctions, as many international analysts point out.
Unfortunately, figures show that we have systematically overestimated the damage Russia suffers due to these sanctions and systematically underestimated the harm caused to Europe.
This implies that a change in the sanctions policy is needed.
According to press reports, the 13th sanctions package may also target a significant number of Chinese and Indian companies. Is the EU now looking to cut itself off not only from Russia but also from other major partners?
Since the 11th package, the EU has put the focus in its sanctions policy not on Russia, but on "third countries", primarily China.
This also means that the punitive measures affect the Russian economy less and less, but pose an even greater threat to Europe than before.
China is the European Union's biggest import partner and second most important export market, thus an escalation of a trade conflict carries extreme risks. A decline in trade relations could seriously hurt the European economy.
The report shows that the prospects for the Eastern European region are particularly good. What can we conclude and how could the region's role change in the future?
The economic growth outlook seems to confirm the trends that many analysts have already highlighted.
The geopolitical and economic importance of the Central and Eastern European region is steadily growing and increasing in value.
The European Parliament elections are coming up. The big question is whether this region will be able to articulate itself more clearly. There have been promising initiatives in the past, such as the cooperation between the Visegrad countries, and it seems that the economic foundations for this are increasingly given, becoming more and more in place.
The forecasts themselves suggest that it would be worthwhile to increase cooperation so that opinions from Central European countries can appear more prominently in political debates on the future of the European Union.
When the Commission itself says that "the EU economy has entered 2024 on a weaker footing than expected", can we expect a change in the current economic policy?
I am sceptical about this. Nor have the Brussels elite recently appeared to be overly sensitive to real findings, even based on their own data. In parallel with the forecasts, the Politico has published a series of articles as part of a pressure exercise. Some of the articles target Hungary because the country would like to see more in-depth analyses before the new sanctions package is adopted. It is a basic rule in economic warfare that the introduction of punitive measures should be carefully planned, otherwise they can easily backfire, so Hungary's demand is quite well-grounded.
The Brussels leadership appears to be unwilling to alter its political position for the time being. It seems that the next opportunity for European citizens to force the Brussels elite to change its stance in political terms will come in the European Parliament elections.
When we talk about the economy of the European Union economy, we must touch on Germany. The forecasts for Germany are not too bright. Are the concerns justified?
Figures from the European Commission also prove that the claims made in recent weeks that Germany is the sick man of Europe are not unfounded. The German economy is struggling with very serious structural challenges. The symptoms of these keep coming one after the other, and the farmers' protests are becoming a symbol of discontent. The problem is that Germany's difficulties pose a very significant challenge to the whole of the European Union, including Hungary, because Germany is perhaps the most important economy in the community. In recent weeks, the head of one of the largest industrial federations has said that German industry has essentially ground to a halt. German companies are increasingly relocating from Germany, and the economy minister himself has sounded the alarm about this.
The foreign minister, who used to be one of the most strongly pro-sanctions lawmakers in Germany, admitted a few months ago that the sanctions did not achieve the desired results, because Russia's economy performed better than expected, and Germany's economy went into recession.
The question is when the German government will be willing to steer the ship around. Society is sending very clear signals that the direction is wrong. It is time for a pragmatic change in Germany and for its economy to overcome the slump.
Cover photo: Oliver Hortay (Source: Facebook)
