Skip to player
Skip to main content
Skip to footer
Search
Connect
Watch fullscreen
Like
Comments
Bookmark
Share
Add to Playlist
Report
‘Now or never moment’: Is it all economic doom and gloom for Europe in 2025?
euronews (in English)
Follow
24/02/2025
“If you don't move forward, you fall off the bike,” is the warning from the European Bank for Reconstruction and Development’s chief economist, Beata Javorcik.
Category
🗞
News
Transcript
Display full video transcript
00:00
Central banks have to tread carefully.
00:02
It may be a now or never moment for Europe.
00:05
If you don't move forward, you fall off the bike.
00:13
Welcome to The Big Question, the series from Euronews,
00:17
where we speak to some of the most influential people in the world of business.
00:22
I'm Angela Barnes, and I am joined by Ljarta Javorcik,
00:27
the chief economist for the European Bank of Reconstruction and Development.
00:33
Thank you ever so much for joining us on The Big Question.
00:35
It's a pleasure to have you with us on the show.
00:37
Thank you for having me.
00:39
So first of all, if we could just start off by talking about
00:42
what are the economic risks in 2025 that you are most concerned about?
00:48
First, conflict. The war in Ukraine is still raging.
00:52
We have a ceasefire in the Middle East, but that's not the same as peace.
00:57
And of course, the situation in Syria is far from stable.
01:00
Second, fragmentation of the global economy.
01:03
I mean, this process has been going for quite a while.
01:06
In 2016, we had the Brexit referendum,
01:09
which rolled back integration of services sectors between the UK and the EU.
01:16
Then in 2018, the US-China trade war has started.
01:20
In 2022, sanctions on Russia were imposed.
01:24
And certainly, unwinding of globalization
01:28
is going to have negative consequences for the global economy.
01:39
For Europe's competitiveness, what do you foresee this year for Europe?
01:42
How far away are they from catching up with the likes of China and the US?
01:47
Well, if you read the Draghi report, the diagnosis is rather stark.
01:53
Europe will not be able to maintain its standards of living
01:56
if it continues on its current path.
01:59
But paradoxically, shocks that Europe may experience in 2025
02:04
may focus minds and lead to action.
02:08
It may be a now or never moment for Europe.
02:11
Donald Trump's tariffs for Europe could be hugely detrimental, for example.
02:16
Well, it's difficult to predict.
02:19
It matters whether every country will be subject to the same tariff and every industry.
02:24
But we cannot control what's happening in terms of other countries' policies.
02:30
So therefore, I think Europe should focus on what's within our control,
02:35
namely finding sources of competitiveness within the single market.
02:39
What about Russian sanctions?
02:41
How have they impacted its economy in 2024?
02:44
Do you think its fortunes will change course with Donald Trump in power?
02:49
Western sanctions imposed on exports to Russia
02:52
have led to a dramatic drop in European sales to Russia.
02:58
Some of that trade has been replaced by exports from other countries,
03:02
namely China and Turkey,
03:05
though probably the technological content of those exports is different.
03:10
And you see in the data that foreign affiliates located in those countries
03:15
choose not to supply the Russian market.
03:18
So sanctions have been taking a toll on Russian productivity
03:23
by depriving Russia of sophisticated technologies embodied in capital goods.
03:29
Moreover, there has been an exit of Western multinationals.
03:34
No new FDI is flowing to Russia.
03:37
And that means lower knowledge flows.
03:39
So these are the effects that are not visible immediately.
03:44
They work slowly, but they certainly are beginning to take a toll on the Russian economy.
03:50
Now, inflation and monetary policy, let's talk about that.
03:53
How do you see inflationary pressures evolving in 2025?
03:56
And what measures should central banks take
04:00
to keep inflation in check without stifling economic recovery?
04:04
So let me talk about emerging markets where my institution, the EBRD, is active.
04:10
We have seen quite a fast process of disinflation by historical standards,
04:16
though inflation remains one percentage point above the pre-COVID level.
04:22
Of course, performance of countries has been uneven.
04:25
And some countries, such as, for instance, Turkey,
04:28
are still facing a very high inflation.
04:32
In Europe this year, if you believe futures markets,
04:36
we are going to see an uptick in prices of natural gas.
04:40
And that's certainly going to put inflationary pressures.
04:45
So I think central banks have to tread carefully
04:48
and react to the data as the data comes in.
04:52
Are you keeping an eye on oil prices too?
04:54
Is that something that is of particular concern?
04:58
Well, oil prices are very important as an indicator for assessment of any economic activity.
05:05
Though, of course, if you believe that the US is going to increase production of oil,
05:10
that could actually lead to lower oil prices.
05:13
So that would put a downward pressure on inflation.
05:17
And let's talk about technology and digital transformation.
05:20
How do you think technological advancements, particularly in AI and automation, of course,
05:26
how do you think that will shape the workforce and labour markets in 2025?
05:30
Well, technological progress translates into structural changes in the economy.
05:36
If you think about Europe,
05:38
Western European countries are much more exposed to AI eliminating some jobs.
05:46
In Eastern Europe, it's more automation of manufacturing
05:49
that will have an impact on the production process.
05:53
What sectors in emerging markets do you expect to see the most growth in 2025?
05:58
So I'm very optimistic about services in emerging Europe.
06:04
Quite a few countries in emerging Europe have succeeded at importing ICT services.
06:11
And the fact that many of them are in Schengen in the same time zone,
06:15
that they have the same data protection regime as the Western European countries,
06:21
bodes well for greater exports of services.
06:25
Moreover, as companies are considering their carbon footprint,
06:29
they are discovering that carbon emissions embodied in services they buy
06:36
constitute a big chunk of that carbon footprint.
06:38
So proximity of Eastern European countries
06:42
makes them more attractive as suppliers of ICT services.
06:47
And I just want to talk to you as well, lastly, about EU integration.
06:50
What is your outlook for the economic integration of countries
06:54
in the Balkans and Eastern Europe for 2025?
06:57
Well, it is in the interest of the European Union
07:00
to have stable and prosperous neighbours.
07:04
It is in the interest of accession countries
07:07
to use the accession process as an anchor for reforms.
07:11
And we've seen how well that has worked
07:14
in the first wave of accession that finished in 2004.
07:19
So the EU needs to show a credible path
07:23
for these countries to join the community,
07:27
while these countries have to exert effort
07:31
to match the standards that are expected.
07:34
It's a bit like with riding a bicycle.
07:36
You need to make progress,
07:38
because if you don't move forward, you fall off the bike.
07:40
Well, thank you ever so much for your insights.
07:43
It's been fantastic to have you on the show.
07:45
And thank you very much all for watching this episode of The Big Question.
07:49
And don't forget, you can catch all our shows
07:51
on the Euronews YouTube channel
07:52
and on our website, euronews.com.
07:54
Head over to the business page.
Recommended
7:52
|
Up next
Europe's COVID recovery: economy bounces back but risks remain
euronews (in English)
15/12/2021
8:00
Brussels Economic Forum 2023: Where does Europe stand, and where is it headed?
euronews (in English)
10/05/2023
2:00
Fact check: Which country is projected to be the fastest growing European economy?
euronews (in English)
06/02/2025
8:00
What’s the impact of Europe’s RRF fund on the Greek economy?
euronews (in English)
03/04/2024
8:00
Is France’s bike industry on the road to a ‘Made in Europe’ comeback?
euronews (in English)
16/07/2021
15:01
‘Don’t make it a hassle to invest in Europe’: Why has the EU fallen behind its competitors?
euronews (in English)
29/04/2024
2:16
Brexit capital gains: Will Europe's financial hubs steal London's crown now the UK has quit the EU?
euronews (in English)
23/02/2021
0:53
Reeves 'not satisfied' as UK's growth forecast downgraded
ODN
26/03/2025
1:16
Stride: UK ‘far from out of the woods’ despite growth
ODN
15/05/2025
2:19
Hammond: Economy 'overshadowed by uncertainty by Brexit'
ODN
11/02/2019
14:43
Europe briefing: Brexit debate continues and ‘gilets jaunes’ say U-turn won’t stop them
euronews (in English)
05/12/2018
1:30
How do America's poorest states compare to Europe's largest economies?
euronews (in English)
06/01/2025
8:00
Putting people first: How can Europe grow its social economy?
euronews (in English)
22/06/2023
1:07
Britain will not have "Mad Max" economy to undercut rivals David Davis says
IBTimes
20/02/2018
1:14
'We didn't want to see what Putin is up to,' admits German Vice Chancellor
euronews (in English)
26/03/2024
1:05
The cost of living continues to rise, what are Labour’s plans to improve the economy?
National World - LocalTV
03/01/2025
1:14
Cameron and Osborne warn of 'DIY recession' after Brexit
ODN
23/05/2016
1:41
Boys and Coach Rescued from Cave in Thailand
i24NEWS (English)
11/07/2018
56:05
Syrian Civil War Anniversary Special
i24NEWS (English)
15/03/2018
10:00
TRENDING | Bruno Mars steals the show at the Grammys | Monday, January 29th 2018
i24NEWS (English)
29/01/2018
0:51
double meaning question to Mathira
Best Right Way
08/07/2016
3:17
pc hotel lahore girl party
Best Right Way
07/04/2016
2:53
Most Beautiful Azan, Adan by Child
Best Right Way
17/03/2016
0:51
DVD-Video---Movie-Music--More-Trailer-(2003-
Stewarttalisa
06/09/2015
2:19
France sets framework for EU's 2040 climate targets
euronews (in English)
today