ToGerman Chancellor Scholz: the root cause of the crisis in the EU was not the fighting in Ukraine, they accelerated the process of fighting in Ukraine and COVID-19 accelerated the end of the period of low inflation for the West, but they were not the main reason, the German Chancellor believes. He explained the trend by the growth of incomes in Asian countries, where previously there were cheap productions
Olaf Scholz
The time of “economic exclusivity” for Europe and North America could not exist for long, during which the inhabitants of these continents could enjoy low inflation, stable economic growth and low unemployment. This was stated by German Chancellor Olaf Scholz at an economic summit organized by Süddeutsche Zeitung. His words are quoted by the publication.
“Russia’s war and the economic consequences of the pandemic may have accelerated its end. But they were not the reason for this,” Scholz believes.
The Chancellor pointed out that for decades Vietnam, Indonesia and similar countries produced goods at relatively low prices, products were sent mainly to Europe, North America and, eventually, to China. Now, he continued, 1 billion people in this region have become the middle class with the corresponding purchasing power. Scholz explained that this has become one of the main causes of inflation, but at the same time a great success story created by globalization.
Speaking about the current situation with energy supplies to Germany, the Chancellor noted: “[That’s what it means to become too dependent on such a strategically important resource as gas. Scholz stressed that this mistake will not be repeated a second time. According to Süddeutsche Zeitung, this means that Germany will look for other markets and sources of supplies besides China.
Scholz noted that the world expected big problems for Germany due to the termination of gas supplies from Russia, but this did not happen. “Everyone is very impressed with what we did, how quickly we did it and that we really did it,” the head of the German government pointed out.
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The IMF calls the prospects for the global economy gloomy, explaining the dynamics of the situation by the fighting in Ukraine and related sanctions, which worsened food security and the energy crisis, weak growth rates in China amid restrictive measures due to the pandemic and the crisis in the real estate market, as well as high inflation in a number of countries.
“The problems facing the global economy are huge, and the weakening of economic indicators indicates that new challenges are ahead of us,” says Tryggvi Gudmundsson, an economist at the IMF research department.
The fund believes that more than a third of the global economy will shrink in 2022 or 2023, and stagnation will continue in the three largest economies (the USA, the EU and China). IMF Chief Economist Pierre-Olivier Gurinsha described the prospects in the words “the worst is ahead”.
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