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Comment by gls2ro | Hacker News Reader

I assume this should be good for EU economy on the long run?

Like exports from EU to US are now more profitable.

Or am I missing something? Can someone with more understanding/background explain how this might effect production and exports?

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Yes, it is indeed good in that it makes European exports more competitive, but on the flip side, imports are more expensive, which can mean inflation and/or increased sensitivity to supply chain disturbances. I’m sure it causes some other problems as well.

(not my area of expertise)

I imagine it would be better for an economy that does huge amounts of exporting compared to importing (like China). Europe does a ton of importing so that side of it sucks.

A currency depreciation naturally leads to a reduction in imports, since the imports become more expensive.

But it’s also a problem when your export to rely on imports

> I assume this should be good for EU economy on the long run?

If they could produce and export a lot of stuff. But that requires energy. At the current energy prices- forget it.

This is a symptom of a much broader story of europe becoming weaker and the euro becoming less valuable. This particular thing affects export prices positively, but its on the backdrop of a bad trend.

A drop of 10% of currency is not enough to offset the other components. Costs for manufacturing are rising fast. PPI (cost of producing) is rising by 20 to 50% in several key EU countries. Lead by energy but also by commodities.

depends on how much the raw materials cost if they're coming from outside the EU, or if other people are competing on price for the raw materials

I'd wager most of the raw the materials come from outside of the EU, and there is indeed intense competition for them from outside economic entities (US, China etc). I mean, even if one were to "discover" a huge Lithium deposit in the Harz mountains (let's say), there's no way that is going to get mined. That actually happened in Serbia, not an EU country, and even there they couldn't open a Lithium mine.

In other words Europe depended on its (relatively) strong currency in order to sustain most of its remaining industry, if that currency strength is gone then things will become real bleak.

Or maybe the financialization of the remaining pieces of industry will save us all, even though I have very high doubts about it. In one of their recent issues The Economist was un-ironically suggesting that the people now producing actual fertilisers in Germany should switch careers and become "fertilisers consultants" or some such, seeing as the production process itself will have become too onerous.

Crazy times, wish we had more "experts" with their feet definitely on the ground compared to what it seems we have (or rather we haven't) right now, after all, parts of Europe have been through all this before (I'm from Eastern Europe, I should know), there should be some institutional knowledge about this type of processes.

This is good for the European countries that export things, and bad for those who don't.

Germany already managed to exhaust all its export surplus on buying gas.

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