21.11.2022
THE EC WARNED OF THE BEGINNING OF THE RECESSION
The European Commission (EC) has lowered its forecast for EU GDP growth in 2023 from 1.5% to 0.3%, noting that in the fourth quarter of 2022 the economies of most of the bloc's countries will not avoid recession.
Amid heightened uncertainty, high energy price pressures, declining household purchasing power, a weaker external environment and tight financing conditions, the euro area and most member states are expected to enter recession, the EC report said for the quarter.
By the end of 2022, the average economic growth of EU member states is expected to be 3.3%. The European Commission attributes the improved forecast to an increase in consumer spending on services following the lifting of restrictions imposed due to COVID-19. In the second half of this year, the Eurozone economy entered a more difficult phase. As a result, economic growth will decline by 0.5% in the final three months of the year and then decline by a further 0.1% in the first quarter of 2023.
According to the report, the economy of three countries will eventually face a decline in 2023. These are Germany, Sweden and Latvia. At the same time, the GDP of Germany, the largest economy in the bloc, will decrease by 0.6% for the year and will be the worst indicator in the eurozone.
According to the EC's forecast, in 2024, Europe's economy will gain momentum, increasing by 1.6% in the EU and by 1.5% in the Eurozone. Brussels officials admit that the EU's economic outlook "remains extremely uncertain" as Russia's military actions continue in Ukraine, and "the potential for further economic operations is far from exhausted".
According to the European Commissioner for the Economy, Paolo Gentiloni, the main threat comes from the unfavorable development of the gas market and the risk of shortages, especially in the winter of 2023-2024.
"Rising energy prices and rampant inflation are now taking their toll and we are facing a very difficult period both socially and economically," he stressed.
The eurozone economy is suffering from record inflation, which hit an all-time high of 10.7% in October. Price growth is expected to be 8.5% at the end of the year and 6.1% in 2023.
