De Guindos predicts that the decline in inflation “will not be as intense”

He also made a point “economic recession” There are “clear downside risks” for the second half of the year and growth is “very, very modest, around 0%”.

The ECB vice president will present Diario Vasco’s XVth edition this Monday at the newspaper’s headquarters in San Sebastián. He attended the Business Forum.

For Guindos, The biggest risk is in commercial real estate Prices are falling in many countries.

De Guindos, latest ECB forecasts lower growth of the economy and slightly more inflation In the years 23 and 24. “We see growth this year as quite moderate in the euro area, at 0.7 percent, and we expect the economic situation to almost stagnate in the second half of the year,” he said.

“The reasons for this are the impact of past inflation in Europe on consumption, that is, it has reduced the purchasing power of families; the lower growth of the world economy, China has a huge share in this.” Debt and real estate situation reduce economic growth.

ECB’s “slightly increased growth projection (inflation) due to the development of the oil price, which is currently rising and approaching $100 per barrel; Depreciation of the euro and unit labor costs”.

He added that headline inflation “will remain relatively high, but over the medium term most indicators suggest it is slowing.” De Guindos emphasized: “Overall inflation has fallen significantly“and so he reminded that “almost a year ago inflation in Europe was over 10%, and our last indicator, which appeared last Friday, was just over 4%.”

“The fundamental situation is a little more stable, but it’s also starting to slow down, so again, the fundamentals are positive,” he reiterated.

Working expenses

Regarding the labor market, he stated the following: “There is a slowdown in job creation, but it is significant, with growth.” He also noted that “productivity is not increasing, that is, it is slowing down somewhat” and that “unit labor costs are increasing in the euro area”. De Guindos emphasized that this is “one of the biggest concerns in terms of inflation.”

On the other hand, he expects that “the improvement in job margins in the euro area in 2022 will absorb some of the increase in unit labor costs,” which will “somehow have a positive, moderate effect on inflation.”

De Guindos mentioned that the increase in interest rates, in his opinion, would make a “significant contribution” to the interest rate target if they remained the same over time. “Inflation approaching 2 percent”. “From now on we will look at the evolution of the data in some way” because “there is a high level of economic uncertainty.”