When Russia invaded Ukraine on February 24, 2022, many of us thought we were entering the first world economic war. The price of oil doubled, and that of gas multiplied by seven. The same thing happened with raw materials, and the shortage of cereals raised fears of famine in the third world. World trade slowed, and inflation reached a level not seen for a long time.
Unquestionably, the greatest impact was suffered by Europe, especially Germany, which is highly dependent on Russian gas. Prices were controlled at 2% and stood at 10.6% on average in 2022. This forced the ECB to intervene with a very tough monetary policy that raised the specter of a new recession across the continent. And all this, when we were just overcoming the crash caused by the covid pandemic.
China also suffered the slowdown in world trade, India, much of Asia, Africa and the Middle East. Russia, severely punished by the measures adopted by the West and isolated from the world, was on the verge of depression. Vladimir Putin even threatened to use the atomic bomb if NATO intervened in the conflict. Only the United States and Latin America seemed to escape the burning.
But against all odds, the world, and especially Europe, have been able to adapt to the war scenario and avoid catastrophe. In fact, the impact on economic growth has been less than that which occurred with the bursting of the 2009 financial bubble and the great lockdown of the pandemic. Two years after the war began, everything has slowed down, and prices are beginning to return to their place. Inflation in the EU closed at 4% in 2023, and it is expected that we will end the year at 3%, already very close to the 2% objective set by the European Central Bank for 2025.
That is to say, we have stopped the blow, but what has not been achieved so far is to close the restrictive cycle and enter another expansive one. It is what should correspond to the technological revolution that we are experiencing. Nothing from the Roaring Twenties. The sharp increase in productivity derived from digitalization and artificial intelligence has not translated into more wealth but into more global debt, which continues to skyrocket. At the end of 2023, a record has been achieved, with 289.6 billion euros. Not only a mortgage for future generations, but also a threat for today, in which Spain stands out as a very advantaged student.
It is true that we are getting out of this. But it is no less true that we are achieving it by cheating in solitaire. Inflation has been controlled by subsidizing prices. Russia, despite the “terrible” sanctions, has continued to sell its gas to Europe, which has allowed it to sustain its economy and finance its war. And to ease our bad conscience we arm Ukraine so that they continue killing each other. And so everything.
But the truth is that until expectations improve, the economic boom we expected will not occur. And that will only be achieved with a ceasefire in Ukraine and Gaza. At the same time, central banks should begin to lower interest rates to make it possible for investment in new technology companies to boost the economy.
As things stand, it is not easy for this to happen. Every time our leaders talk about arming themselves in anticipation of a Russian attack and Putin threatens nuclear war, the prospects worsen. Dreaming is free.
