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by Niels Saelens
published on about •
3 read less
published on about •
3 read less
The ECB today presented its Financial Stability Review. In response to that report, Vice President Luis de Guindos, in a conversation with the American news site CNBC, warned of a possible sharp fall in the stock market in the event of further shocks in the global economy.
Why is this important?
The economic outlook (in the short term) remains highly uncertain. For example, the uncertainty in the financial sector has not yet completely disappeared, and the risk of a recession has certainly not yet been ruled out. In fact, in Germany, Europe’s largest economy, gross domestic product (GDP) has contracted for two quarters in a row.In the news: “A sharp fall in the stock markets is not ruled out,” Guindos said in an interview with CNBC. “The reason is that valuations are high, so if there is bad news on the macroeconomic outlook, it could trigger a correction in the markets.”
- In the report, the ECB notes that global markets have had a strong start to the year on the back of falling energy prices, China’s reopening and the surprising resilience of China’s economy.
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