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The projected real GDP growth rate for the EU in 2023 is 1.0%, when measured in euros. Right now, €1 is about $1.1, while it was around $1.0 a year ago.
by jltsiren 3y ago
The projected real GDP growth rate for the EU in 2023 is 1.0%, when measured in euros. Right now, €1 is about $1.1, while it was around $1.0 a year ago.
- JumpCrisscross 3y ago> projected real GDP growth rate for the EU in 2023 is 1.0%, when measured in euros. Right now, €1 is about $1.1, while it was around $1.0 a year ago. Ah, I see the problem. 1% real GDP growth means €1 becomes €1.01. If, in the same time, €1 went from buying $1 to buying $1.1, then you--round trip--went from having €1 that buys $1 to €1.01 that buys $1.11. But! That $1 doesn't buy today what it bought one year ago. (The precise point of fudgery is when I say "€1 went from buying $1 to buying $1.1." We went from one 2022 € buying one 2022 $ to one 2023 € buying one 2023 $. We deflated the euro GDP but not the exchange rate.) TL; DR The EU is not experiencing double-digit real growth in dollar terms.
- jltsiren 3y agoThat 1% already the real GDP growth rate. Nominal growth is more like 6-7%, as inflation is a bit higher in the EU than in the US.
- JumpCrisscross 3y ago> 1% already the real GDP growth rate In Euros. The dollar was also losing real value in that time. You can't compare a real figure from one time period with nominal figures from another without doing some adjusting. (You're describing, in essence, a carry trade.)
- jltsiren 3y agoYou earned €1 last year and €1.06 today. You could exchange that to $1 last year and $1.17 today. If US inflation is currently 3.1% and you go to the US, that money buys you 13% more than $1 last year. These numbers change from day to day, because exchange rates are full of effectively random noise. Of course, the real growth was only 1% and not 13%.