Donald Trump’s victory will have significant economic implications in Europe, to the point that an escalation of tensions between China and the United States leads to a serious recession on the Old Continent. According to an internal presentation prepared by the Research Department of the Bank of Spain, published this week almost at the same time as the election results were known, to which he had access elEconomista.esthey announce that Intensification of the trade war would take three points from European GDP during the first year.
The Eurozone increased by 0.4% in the third quarter and the Twenty-Seven closed this same period with an advance of 0.3%. Given a serious scenario in this trade war that the Bank of Spain is talking about, The euro zone would be doomed to a recession of 2.6% at the end of this exercise.
In the presentation prepared by the Director General of Economy of the entity, Angel Gavilanthey specify that the situation will be much more serious during the first decade of this possible deep commercial fragmentation, but they emphasize that later the situation would begin to normalize.
In the event that the scenario of this global trade division caused by Donald Trump is more lax, This would also have a negative implication in the economic performance of the euro zone. Specifically, GDP would increase by around one point during the first decade.
Even if the president-elect of the United States will concentrate all his efforts on controlling China’s commercial power and on decoupling the American economy from the Asian giant as much as possible, the objective of his economic program is to detach the American economy from globalization as much as possible and make it more protectionist and self-sufficient. The universal tariff of 10% that he wants to impose directly affects the Old Continent, one of the main trading partners of the United States.
Head of European Macro Research at Natixis Corporate & Investment Banking Germany, Dirk Schumacher He said it clearly: “The euro zone could enter into recession in response to these measures.”
It is clear that all the experts consulted by elEconomista.es agree that the new commercial reality that Donald Trump intends to implement at the global level will subtract between one and one and a half points from the GDP of the euro zone.
A report from Goldman Sachs, published after the publication of the election results and to which elEconomista.es was given access, they say the proposed 10% tariff “constitutes a clear risk.”
“European economies are more exposed to trade and, more importantly, they are more sensitive to trade policy uncertainty,” say the report’s experts.
Even if they call for calm and recall that the tariff package for European economies “it will be much more limited” and will focus primarily on automobile. Either way, it looks like there will be new pricing.
According to Eurostat data, Last year, the European Union exported 502.3 billion euros of goods to the United States. This represents a fifth of all non-EU exports and 90% of the economic bloc’s transatlantic sales.
SO, the most affected sectors These would include machines and vehicles (8,207.6 billion euros), chemicals (137.4 billion euros) and other manufactured products (103.7 billion euros).
It is clear that, given all the previous figures, Germany would be the most affected economysince it is the main exporter of these products, with a total of 157.732 million euros in shipments to the United States.
For his part, Spain is more protected from this possible tariff warsince exports to the United States totaled 18.904 million euros last year, according to Eurostat.
“Overall, our analysis indicates an impact of 0.5% on the real GDP of the euro zoneranging from 0.6% in Germany to 0.3% in Italy, with a moderate impact of 0.4% in the United Kingdom. We expect most of the impact on growth to materialize between the first and fourth quarters of next year,” Goldman economists estimate.
Predictions which coincide with those of Dirk Schumacher. The expert calculates that these new obstacles to imports from Europe would subtract “0.5% from Germany’s GDP, 0.3% from France, 0.4% from Italy and 0.2% from Spain”.
Thus, the forecasts of investment bank on the growth of the euro zone are reduced to 0.8% during the next financial year (below the 1.2% consensus).
Goldman and Dutch bank ABN.AMRO agree that the impact on European inflation will be “limited”both were expressed in this term. Yes, the Dutch entity says this would result in the reduction in interest rates by the ECB accelerates “which will likely lead to further divergences between US and European monetary policies.” This thesis is also raised by Goldman Sachs experts in their document.
The point is that it would result in a result. According to the Dutch bank, European government bonds are “a direct consequence of the increasing likelihood of implementation of Trump’s policies.” they will become weaker and this weakening would lead to several fiscal stimulus packages from member countries to stimulate growth. “Thus exacerbating the already historically high deficits in Europe,” they reiterate.
