EC Admits Beginning Of Recession In Euro Area
The European Commission revised its prediction for GDP growth in the EU countries in 2023 from 1.5% to 0.3%, warning that the majority of member states’ economies wouldn’t be able to avoid recession in the fourth quarter of 2022. According to the European Commission’s quarterly report (cited by Bloomberg), « the euro zone and most member states are expected to fall into recession amid increased uncertainty, high energy price pressures, lower household purchasing power, a weaker external environment, and tighter EU financing conditions. »
The average economic growth rate for EU member states is expected to be 3.3% in 2022, according to study data. The European Commission attributes the improvement in projection to a rise in consumer spending on services following the lifting of COVID-19-related limitations. Nevertheless, the eurozone economy started a more challenging period in the second part of this year. It will consequently contract by 0.5% in the final three months of the year and then shrink by 0.1% further in the first quarter of 2023.
According to the research, at least three economies—Germany, Sweden, and Latvia—will experience a recession in 2023. At that point, the European Commission predicts that Germany’s GDP, the largest economy in the union, will contract by 0.6% over the course of the year, making it the poorest indicator in the euro zone.
According to the European Commission, Europe’s economy will pick up steam by 2024, expanding by 1.6% in the EU and 1.5% in the euro zone. But as Russia’s invasion into Ukraine continues, officials admit that the EU’s economic outlook « remains extremely uncertain » and that « the potential for further economic turmoil is far from exhausted. »