Europe advances slowly on the road of recession recovery, the internal demand being the most important reason for growth. The buying power of population is straightened by the weak inflation, and the perspectives are generally good.
The European Commission ensures that the recovery rhythm is a normal one, considering the problems from the last five years. Of course, there are still dangers and weak economies, but those might recover also pretty soon.
What could be improved?
Greece will get out of the recession that erased 20% of its economy, because of exports and investments. The Greek economy is more competitive because of the reforms on the labor market. However, the costs of recovery were huge, and the Greeks are expected to pay it for several decades.
Spain was devastated by the crash of the real estate market, but it is expected a robust growth of 2.5% for the next semester. As this will be the third semester of economical growth successively, we can say that Spain is out of the recession too, but the unemployment is still high in this country.
What must be done?
Whenever an economical growth is recorded, the states are tempted to create inflation, with the goal of increasing the governmental incomes. The European Commission warns that the recovery is still at the beginning, and it is not recommended for the states of the EU to do so. The conflict between Russia and the Occident might represent a huge obstacle for recovery, so everybody has to be prepared.
“On the short term, the decreased inflation can support the increase of Gross Income, but for a long term, a reduced inflation increases the real value of the public debt, which means an increase of interests” warns Marco Buti, the General Director of the Economical division of the European Commission.
The Eastern Economies
The institution considers that the slow inflation might turn into deflation in a few years, but it is better to stay with this risk for now.
The Bulgarian economy is still the smallest in the EU, and it evolves under its potential. However, the recovery after the recession will be shown in force here, which might become one of the future “Eastern Tigers”. The gradual increase of the internal demand and the increasing exports are the reasons for which this country could show an immense potential soon.
The Hungarian economy is one of the strongest in the East. It is also sustained by internal growth. The recovery process is equilibrated in this country. New foreign investments made it possible for Hungary to have better results than expected. Public investments also grew with 34% since the last year, which is also a good sign.
As for Poland, the biggest economy in Eastern Europe, the Commission says that the comeback of the last year will consolidate this year. Poland has a big problem with public finances, but this will be improved soon. Another reason for worries in Poland is the Ukraine situation, which already damages a part of the Polish growth.
In fact, the Ukrainian crisis is the only shadow on the European growth, and this is why it is important for all the EU countries to do anything possible to solve this matter soon.