Various economists consulted by ARA have agreed that the situation is indeed worrying, although there is no unanimity on the impact of the crisis arising from the war.
“A new recession is a real possibility,” says José García Montalvo, a professor at Pompeu Fabra University. “There is a problem that we did not have in 2012, which is that we have inflation and central banks will not be able to support the economy,” he said. “We have less power in monetary policy and fiscal policy has already used a lot of cartridges during the last crisis and it is taking us at a bad time,” he added.
García Montalvo recalls another decisive factor and a direct consequence of the situation experienced by the war: the price of energy. “There are countries that are very dependent on oil, and you have to think that the state budget in Spain was made with a price of a barrel of Brent of 58 dollars, and right now it is 119,” he said.
The expert’s forecasts are worrying: “If we combine inflation with uncertainty, which affects investment, and confidence, which affects consumption, and add to the fall in stock markets, which means less wealth, we are left with a bad situation”. And Montalvo adds that it could get worse if the conflict drags on. “We now have a problem with high prices, but it could be much more dramatic if we have a problem with restrictions, which would affect the industrial sector and cause shortages,” he says. “This can lead us to a situation very similar to that of 1973 or 1981, with an energy shock and with some countries, such as Germany, which is not that they have not been prepared, but that they have unpreparedFor this economist, the situation could lead to stagnation: soaring prices and a stagnant economy.
No winners in Europe
A similar analysis is made by Albert Carreras, a professor at Pompeu Fabra University. He agrees that the time is right for the West. “Putin has started the war at a time when the economy is looking forward to emerging from the crisis, and that is worse off,” he said. “If it lasts, the war will hurt us all, there will be winners and losers, but there will be no winners in Europe,” he said. In this sense, Carreras explains that the less the relationship with Russia, the less impact, and that is why Spain may be among those who suffer a lower impact in the context of the EU.
“We are moving to a scenario similar to that of the 1973 oil crisis, when there were a few years of high inflation.” That is why he claims that the possibility of a recession is real. “It is pertinent to think about it. Although the war is short-lived, it remains to be seen how it will end, because if Russia retains control of Ukraine, the European Union will not be able to benefit from the massive investment in the country. it would stimulate the economy. ” In his opinion, all this forces the European Central Bank (ECB) to raise rates.
Iese economist and professor Antonio Argandoña holds the opposite position. “I think the ECB ‘s decisions will be conservative; inflation will rise temporarily, though not short, but I suspect there will be no drastic measures and thethe status quo“In terms of economic policy, Argandoña believes that the momentum will also be maintained.” there is a severe recession. ”
Argandoña assures that the economic impact of the conflict will be “limited” outside the most dependent sectors of Russia and the impact on gas and oil. “Nobody takes that away from us, but the recession will not be collective,” he said.