European Central Bank Governing Council Member and Latvian Central Bank Governor Martins Kazaks (pictured) warned in a blog post on Monday that the euro area's recession probability is increasing due to trade wars triggered by United States President Donald Trump's tariff policies.
"Recession is not currently the baseline scenario, but with such far-reaching potential changes in geopolitics and world trade, its probability is high," the central banker said. He said that current projections see the European economy growing around 1% in 2025, although he warned of emerging downside risks.
Furthermore, Kazaks noted that tariffs add risk and uncertainty to the global economy. "The course of events so far suggests that the uncertainty is not a side effect of policy, but an opportunistic choice of US politics," he concluded.
