In this week's episode, Real Economy talks to IMF’'s Deputy Director General Gita Gopinath and EU’'s Trade Commissioner Valdis Dombrovskis about the economic consequences of ’'s war in Ukraine.
The team is also looking forward to the Brussels Economic Forum ’, AB’'s most important economic event, which focuses on some of the major challenges facing young people and future generations.
War brings economic uncertainty
Russia’'s war is above all a tragedy for the Ukrainian people. The immediate reaction of the European ’ was to show solidarity and to help refugees. Now, as food and energy prices rise rapidly and Europe urgently moves to end its dependence on Russian energy, what does this mean for the EU economy? By the end of this month, the Brussels Economic Forum will be ’'s biggest question.
Naomi Lloyd spoke to Gita Gopinath, number two of the International Monetary Fund ’ in Washington, ’, to give this all a global perspective.
Naomi Lloyd, euronews:
How far-reaching will the economic impact of the war on Europe be and what will it mean for our daily lives?“
Gita Gopinath, IMF Executive Vice President:
“UkraineThe war in ’ will have a significant impact on almost all of Europe. By lowering our growth forecasts for major European economies by about one percent, we've reduced – for this year to what we currently predict is – to three percent. At the same time, we expect inflation to be significantly higher. So, of course, apart from Ukraine and the refugee crisis we see there, the most direct impact we see on people's lives is an increase in commodity prices, a significant increase in energy costs. And this affects the purchasing power of the People, and the impact of the war and sanctions is not fully revealed at this time.”
Naomi Lloyd, euronews:
“In view of all this, what steps does AB’ need to take to ensure a strong economic recovery, especially for young people?”
Gita Gopinath, IMF Executive Vice President:
“So the pandemic was particularly difficult for young people in the first place, and now there is high uncertainty that comes with war and war, creating an impact of trust. This affects the way businesses hire. And you can see that this also tends to affect young employees who are just joining the workforce. So in terms of what needs to be done, for example, we are currently seeing a debate to provide targeted support in terms of cash transfer to households hit hard by this increase in energy prices. Investing is also important. On the one hand, we need to pay attention to energy security while on the other hand, we need a green transition to happen. A climate investment fund would also be very useful.”
the Brussels Economic Forum
Gita Gopinath will be one of the many keynote speakers at the Brussels Economic Forum in ’ on 17 May. Here senior decision-makers, academics, civil society and business leaders discuss Europe’'s biggest economic challenges.
The most important economic event of AB’ has been going on for more than 20 years and 2022 will be the European Year of Youth.
What kind of future awaits the next generation right now? To answer this question, Real Economy spoke to some young economists and politicians who will be present at this year's Brussels Economic Forum’.
Danish MP Kira Marie Peter-Hansen, who was elected three years ago, spoke of her growing concern about what awaits us in the next few years.
“I'm afraid we won't achieve our climate goals. I'm afraid we're going to see a bloc in Eastern Europe, ’, going backwards in democracy and human rights. Then we will face difficulties in our democracy and we will be in a new Cold War ’, so to speak. But I'm also very hopeful, and I think we can manage all these crises. And when we look at the younger generation, it really gives me hope. - ”
Each generation has its share of challenges, but the challenges facing the Z and Alpha generations seem enormous.
2008After the financial and economic crises caused by ’, the COVID-19 pandemic is now coming. To this mix is added the ongoing climate crisis and the war in Ukraine’.
The digital revolution
In addition, the digital and technological revolution is preparing to shake up the world as we know it. Professor Roxana Mihet of the University of Lausanne, ’, says governments face a tough balancing act when it comes to this transformation.
The future we have tomorrow will depend on the policies we implement today to offset the benefits and cost of digital transformation. And I think governments around the world need to be careful about how and when they regulate these technologies, because very little regulation will harm individuals. But too much regulation can hurt them, too, and it can hurt economic growth.”
For this generation, born with a smartphone in their hands, it will be vital to move forward with both green and digital transition. But how can we be sure that these great destructive tendencies do not increase social inequality?
Diego Känzig, a PhD candidate in Economics at London Business School, says he believes that everyone can do their part by changing their behavior, but governments should set the agenda.
I think it really depends on politicians to create a framework that basically allows us to reduce carbon emissions and encourage the behavioral changes we need to face this climate problem. And the European Union is doing a lot on this front.”
Real Economy met with Valdis Dombrovskis, Executive Vice President and Trade Commissioner of the European Commission ’, to find out more about what kind of economy we are leaving to the next generation and what needs to be done to make sure that this economy is in good shape.
Naomi Lloyd, euronews:
“EuropeWhat steps need to be taken to ensure a strong recovery of ’?”
Valdis Dombrovskis, Executive Vice President of the European Commission.
“Of course, first of all it is important to work to stop the war in Ukraine’. I think that's a goal we have to pursue on our own. But it is clear that the faster we stop the war, the better the economy will recover. It is important that we strengthen the resilience of the European economy and that member states make good use of the funding they receive from rescue and resilience opportunities. It's also clear that we need to move away from our dependence on ’'s fossil fuels.
Naomi Lloyd, euronews:
“EuropeHow worried are you that we won't reach ’'s climate targets?”
Valdis Dombrovskis, Executive Vice President of the European Commission:
“We are clear that we need to move forward in line with our climate goals: 55% reduction by 2030’ and climate neutrality by 2050’. I can say that the fact that we are accelerating right now, that we are moving away from Russian fossil fuels does not contradict this; Because that's exactly what the Green Deal ’ is for.”
