For the first time in 13 years in the Eurozone! Economist Warning
The money supply in the eurozone has shrunk for the first time in 13 years
The European Central Bank recently released data showing that the eurozone's money supply has shrunk for the first time since 2010, as private sector loans stagnated and deposits decreased. Economists warn that this foreshadows further economic decline in the eurozone in the future. Meanwhile, the upward pressure on inflation has not been eliminated, and the eurozone economy is shrouded in the shadow of stagflation.
Data shows that the money supply in the eurozone decreased by 0.4% year-on-year in July this year, mainly due to a decrease in loans. According to statistics, in July, the growth rate of lending to the private sector dropped to 1.6%; Government loans also decreased by 2.7%, the largest decline since 2007. At the same time, due to the increase in loan interest rates, household loans, mainly mortgage loans, are also continuing to decline.
A contraction in the money supply will bring a series of chain reactions, which, according to Philip Lausberg, a policy analyst at the European Policy Center, will further reduce the competitiveness of the eurozone economy.
![For the first time in 13 years in the Eurozone! Economist Warning](https://a5qu.com/upload/images/751634b5aa5869b5456bb6904cac9351.png)
Philip Lausberg, Policy Analyst at the European Policy Center: A decrease in funds means credit may become more expensive, which will further increase the difficulty for European companies and governments to invest, as credit costs are higher. If you reduce your investment, competition between Europe and other parts of the world will become more difficult.
The growth of money supply is usually one of the key indicators for measuring economic activity. During periods of economic prosperity, as commercial banks increase their lending, the money supply often grows rapidly. Before an economic recession arrives, the growth rate of money supply often slows down. The contraction of the money supply in the eurozone actually reflects the sluggish economy of the European Union. The eurozone will face the challenge of a weak economic environment in the coming quarters.
European Policy Center policy analyst Philippe Lausberg: The economic growth of the European Union is very sluggish, and it is currently expected that the growth rate of the eurozone this year will not exceed 0.3%, so it is obvious that there are growth problems. I don't think the European economy will recover before 2024.
According to data from the European Commission, the Eurozone's economic sentiment index fell from 94.5 in July to 93.3 in August, marking the fourth consecutive month of decline and lower than expected. Economists believe that important economic indicators in the eurozone have accelerated their deterioration, and the eurozone economy is facing the risk of recession. Meanwhile, the inflation rate in the eurozone remained at a high level of 5.3% in August. These signs indicate that the risk of stagflation in the eurozone economy is increasing.
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