13 Nov 2022 20:50 PM
EU Economic Commissioner Paul Gentiloni.
[Observer Network]According to a report by the European version of “Politician” News on the 11th, the European Commission warned on the same day that due to factors such as the surge in inflation stimulated by the energy crisis, the economy of the EU and the euro zone will shrink from the end of this year to the first quarter of next year, equivalent to A technical recession, while euro zone inflation is still set to rise at a faster-than-expected pace next year.
The European Commission believes that uncertainty and rising costs are “expected to push” the euro area and most EU member states into recession in the last quarter of 2022, “with the contraction in economic activity continuing into the first quarter of 2023, and the European economy is expected to grow Growth resumes in spring”. However, the agency cautioned that limited demand will still dampen economic activity, with growth for the full year in 2023 likely to be just 0.3 percent, down more than a percentage point from its July forecast.
Meanwhile, the European Commission sharply raised its inflation forecast for this year and next. The agency expects the full-year inflation rate to reach 8.5% in 2022, nearly one percentage point higher than the previous forecast (7.6%); the full-year inflation rate in 2023 will still reach 6.1%, more than two points higher than the previous forecast (4%). percent. In addition, unemployment will rise to 7.2% in the euro area and 6.5% in the EU in 2023.
According to the agency, three countries in the euro area are expected to experience negative economic growth in 2023: Germany -0.6%, Latvia -0.3% and Sweden -0.6%; only four countries are expected to experience growth rates: Ireland, Malta, Romania and Bulgaria will exceed 1%, and the remaining countries will grow at or below 1%.
The European Commission also gave its first outlook on the economic outlook for 2024: the euro zone is expected to return to growth of 1.5% and the EU to 1.6% by then.
Agence France-Presse commented that the Russian-Ukrainian conflict has exacerbated the European energy crisis and pushed up inflation, while the contraction of European financial conditions has also hit business confidence.
“We are approaching the end of a year in which the shadow of the Russian-Ukrainian conflict hangs over the European continent,” said the European Commissioner for the Economy, Paolo Gentiloni. “Soaring energy prices and rampant Inflation is taking its toll on Europe, and we are in a very challenging phase, both socially and economically.”
According to the latest data released by Eurostat on October 31, the inflation rate in the euro zone reached 10.7% in October, an increase of 0.8 percentage points from September, which once again hit a record high and was also higher than market expectations.
In this context, the European Central Bank held a meeting on October 27 and decided to raise interest rates by 75 basis points again, which is the second time since September 8 to raise interest rates by 75 basis points. Since the beginning of this year, the European Central Bank has raised interest rates by a total of 200 basis points, which has raised concerns about the European economy falling into recession.