ECB expects tariffs to hit growth more than expected

PANews reported on April 9 that according to Jinshi, four sources indicated that the impact of U.S. trade tariffs on Eurozone economic growth could be much larger than the European Central Bank's initial estimate, and volatility might also drag down inflation in the short term. This could potentially plunge the Eurozone economy into stagnation and shatter hopes of economic recovery. The Eurozone economy had been growing until recently, supported by large-scale public investment programs. The European Central Bank predicted last month that trade wars would reduce Eurozone economic growth by 0.5 percentage points in the first year, with prices rising by a similar magnitude if the EU takes retaliatory measures. However, sources stated that the actual tariffs announced by Trump are more harmful than model estimates, and ECB staff have been asked to provide new figures for policymakers to discuss at the April 17 meeting. Informal discussions among decision-makers could begin as early as this week. Everyone believes that the 0.5 percentage point estimate is now too low, with one person suggesting the impact could exceed 1 percentage point. This would essentially eliminate all economic growth, as the Eurozone's growth is expected to be only around 1% this year.