Reports that eurozone growth has slumped to levels last seen more than four years ago have been blamed variously on ongoing US trade hostilities with China and Europe, Brexit uncertainty and political instability in countries such as Brazil.
But according to European Central Bank Vice-President Luis de Guindos, Eurozone growth is simply returning to normal after a exceptional 2017 and the reported slowdown is mainly due to weaker external demand.
Speaking on Monday, he also addressed Italy’s recent dispute with Brussels over plans for a more expansionary budget. The country recorded zero growth in the first three months under its new populist government and is now at risk of its third recession in a decade.
Mr de Guindos said that negative market spillovers from Italy’s recent budget tussle were so far limited, and argued that Rome’s main problem was not high spending but weak growth, which can only be addressed through longer term, structural reforms.