A trade war threatens the economy of the euro area, economists estimate for FT

Two the biggest threat to the economy of the euro area is the global trade war and the inability to resolve internal political conflicts, 72 economists estimate the newspaper of the Financial Times (FT) in the survey.

The danger of a trade war is increased by the next president of the United States Donald Trump’s announced 20 percent import tariffs on all foreign products and 60 percent tariffs on Chinese products.

69 percent of the economists interviewed by FT consider the imposition of tariffs likely. Of the respondents, 68 percent consider them to be the biggest single threat to the euro area economy.

Customs would cause disturbances in world trade, which would inevitably be reflected in the euro area. One danger is that China starts selling products to Europe at dumped prices, which would reduce production in Europe.

The central goals of Trump’s economic policy are to put the interests of the United States before everything else. The purpose of tariffs is to protect US production from international competition.

The Eurozone has so far avoided recession, but economic growth is fragile. European Central Bank forecast the euro area economy will grow by 1.1 percent next year, 1.4 percent in 2026 and 1.3 percent in 2027.

of the Financial Times in the survey, 61 percent of economists support the president of the European Central Bank Christine Lagarde a proposal that the EU should seek to negotiate with President Trump to prevent a full-scale trade war.

A third of economists warn that Europe’s inability to solve its “homemade” problems is also a significant threat to the economy. Work productivity has grown weakly for a long time, the bureaucracy is large and Europe has lagged behind in utilizing new technology.

In the autumn, the governments fell in France and Germany due to political differences over next year’s budget, which is likely to hold back the development of the two largest national economies.

However, a fifth of the economists who answered think that the gloom of the euro area economy can ultimately be an advantage, because it forces necessary reforms.