STORY: Eurozone inflation eased, but months from 2 pct target: Spanish economist
DATELINE: Aug. 5, 2023
LENGTH: 00:02:42
LOCATION: BARCELONA, Spain
CATEGORY: ECONOMY
 
SHOTLIST:
1. various of the European Central Bank
2. SOUNDBITE 1 (Spanish): JAVIER DIAZ-GIMENEZ, Professor of Economics at IESE Business School
3. various of pedestrians in Spain
4. SOUNDBITE 2 (Spanish): JAVIER DIAZ-GIMENEZ, Professor of Economics at IESE Business School
5. various of pedestrian in Spain
6. various of shopping malls in Frankfurt, Germany
7. SOUNDBITE 3 (Spanish): JAVIER DIAZ-GIMENEZ, Professor of Economics at IESE Business School
8. various of shopping malls in Frankfurt, Germany
9. SOUNDBITE 4 (Spanish): JAVIER DIAZ-GIMENEZ, Professor of Economics at IESE Business School
 
STORYLINE:
 
Eurozone inflation dipped in July to 5.3 percent, the lowest level registered since February 2022, data published by the EU's official statistics agency showed Monday.
 
The drop of Eurozone inflation to pre-Ukraine crisis level is "good news," a Spanish economist told Xinhua in an interview on Friday, although he also pointed out that it will take "many months" to reach the Eurozone's target of 2 percent.
 
SOUNDBITE 1 (Spanish): JAVIER DIAZ-GIMENEZ, Professor of Economics at IESE Business School
"Inflation peaked at 11 percent, and we're now five and a half points lower than that maximum, which is good news, but there's another reading, which is that 5.5 percent is still a long way away from 2 percent, which is the stated goal of the European Central Bank (ECB).
The fact that underlying and general inflation are at the levels they are tells us that there is still work to do and Europe is probably going to need a prolonged period of low growth for prices to return to a level of around 2 percent."
 
The professor argued that as the 2 percent target was explicitly set as part of the ECB's mandate, the bank is obligated to do whatever it takes to reach the goal, a process that will not only take time but will mean interest rates will not be coming down any time soon.
 
SOUNDBITE 2 (Spanish): JAVIER DIAZ-GIMENEZ, Professor of Economics at IESE Business School
"It will take many months for inflation to return to 2 percent, which means the secondary but important consequence is that there's no reason to expect the European Central Bank to lower interest rates in the whole of 2024.
I would consider it a real success if we finish the year with an inflation rate under 4 percent. It would confirm that the downward trend is continuing, but I don't believe we'll see sharp falls unless something changes."
 
Diaz-Gimenez noted that judging whether the ECB's anti-inflationary measures are working well is entirely relative.
 
SOUNDBITE 3 (Spanish): JAVIER DIAZ-GIMENEZ, Professor of Economics at IESE Business School
"Economics is about comparisons. If you compare the rate with its peak, you could say controlling inflation has been a great success, because it reached 11 percent, but if you compare it with historical levels, an inflation rate of 5 or even 4 percent is very high for the Eurozone."
 
In the professor's opinion, the current situation is what it is and people should resign themselves to a long process before the Eurozone can get back to the more desirable economic figures it has historically enjoyed in the past.
 
SOUNDBITE 4 (Spanish): JAVIER DIAZ-GIMENEZ, Professor of Economics at IESE Business School
"From the macroeconomic point of view, this year is going to end up being a bad one. We can't call it a good year if we compare it with other years in the past. A good result for the Eurozone would be growth of over 2 percent and inflation under 2 percent."
 
While it seems that hitting the ECB's inflation rate target is not going to be either quick or easy, Diaz-Gimenez also pointed out that without doubt the Eurozone is at least moving in the right direction towards eventual recovery.
 
Xinhua News Agency correspondents reporting from Barcelona, Spain.
(XHTV)