According to European Commission forecasts, twenty-seven should experience a minimal growth rate of 0.3 % in 2023, with inflation brought around 7 % against 9.3 % this year.
by Philippe Jacqué (Brussels, European Bureau)
The shocks triggered by the war in Ukraine will end up putting the European economy when stopped. The twenty-seven should officially enter a recession this winter. This is the content of the autumn economic forecast issued in Brussels, Friday, November 11, by the European Commission. “The economy is at a turning point after a first semester of the surprisingly solid year, recalled Paolo Gentiloni, the economy commissioner. She nevertheless lost his momentum in the third quarter, and recent data suggest a contraction this winter. “
In the fourth quarter, the “Most EU member countries” should experience a drop in their GDP. And they should chain on a first quarter of 2023 also negative. Two consecutive quarters of decrease which correspond to the technical definition of a recession. Throughout the year 2023, on the other hand, the community executive envisages a very modest increase in European GDP, around 0.3 %. In large countries, next year, only Germany should display a drop in its activity by 0.6 %, while France will experience growth of 0.4 %. In 2024, Europe projects growth of 1.6 % for the entire continent.
Brussels still notes that 2022 was much more solid than expected. In the current year, the growth rate should reach 3.3 %, compared to 2.7 % still envisaged a few months ago. The slowdown in third quarter activity to 0.2 % (compared to 0.7 % for the first two quarters), is widely explained by the effects of war, in particular the runaway of inflation.
The war effect in Ukraine
While the vigor of the economic recovery at the exit of Covid’s pandemic had fueled inflation, under the double effect of the massive recovery plans and numerous disturbances of the supply chains, the war in Ukraine accelerated the phenomenon of the rise in prices. For 2022, inflation should be 9.3 %, after the peak of October beyond 10 %. According to Mr. Gentiloni, “next year, inflation should drop moderately, around 7 % for Europe, and 6.1 % for the euro zone before a much more vigorous reduction in 2024.” Brussels anticipates a level 3 % (2.6 % in the euro zone).
“These projections are mainly explained by the wholesale prices of gas and electricity significantly higher than expected in the summer, which exerts pressure on the retail prices of the energy as well as on the Most of the goods and services of the consumer basket, “said a commission press release.
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