ECB’s Kazāks: Growth Risks Clearly on the Downside; Odds of Recession High

21 April 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks on Monday said that the ECB would set policy meeting by meeting in an environment characterised by diminishing price pressures and a high chance of recession.

In a blog post on an economic analysis website maintained by the Bank of Latvia, which he heads, Kazāks said that because of uncertainty about which way developments would go, ‘we will make decisions in the ECB Council from meeting to meeting, keeping our eyes open and taking into account a wide range of economic indicators.’

The economy way weak and the labour market was ‘gradually cooling’ from a high level, he said. Inflation dynamics had been more or less consistent with projections, while slower wage growth and the stronger euro would limit upside price pressures, he said.

‘Current forecasts for the Eurozone still promise around 1% growth this year, but it is slow and the risks are clearly on the downside’, he said. ‘Recession is not currently the base scenario, but with potentially such large-scale changes in geopolitics and global trade, its probability is high.’

The likelihood that an alternative scenario would materialise instead of the baseline was near about the same as that of the baseline coming to pass, he said

‘In such a case, it is quite easy for the economy to “jump from one track to another” and go in a completely different direction’, he said. ‘The task of European policymakers is to make the probability of negative scenarios as low as possible and to strengthen the resilience of the economy and the emergence of a scenario favourable to us.’