[ad_1]
The European Commission has lowered its forecast for economic growth next year.
The report said 19 countries that use the euro will fall into recession in the winter as inflation peaks last longer than expected and high fuel and heating costs eat into consumer purchasing power.
The European Commission’s autumn forecast released on Friday forecast a decline in economic output in the final three months of this year and the first few months of 2023.
High energy prices, rising living costs, higher interest rates and overall uncertainty “are expected to push the EU, euro area and most member states into recession in the final quarter of the year,” the report said.
Growth forecasts for the full year of 2023 were revised down to 0.3% from 1.4% previously forecast in July.
“Europe is expected to return to growth in the spring as inflation gradually loosens its grip on the economy,” the report said.
“However, economic activity will be subdued as strong headwinds still dampen demand.”
The worst performer next year is likely to be Germany, Europe’s largest economy and one of Ukraine’s most reliant pre-war countries on Russian gas.
Gas and electricity prices have soared as Russia has reduced supplies to Europe to levels only compared to before the invasion of Ukraine.
Jeremy Hunt says he must address the root causes of Britain’s recession. The UK is the only G7 country whose economy is shrinking. The root cause is the 12-year low growth of this Conservative government.
— Bill Esterson (@Bill_Esterson) November 11, 2022
German output is expected to contract by 0.6% next year.
Inflation will peak later than expected, with average inflation in the euro area rising to 8.5% and 6.1% in 2022 and 2023 towards the end of the year.
This is an increase of nearly 1 percentage point from 2022 and more than 2 percentage points from 2023.
Two consecutive quarters of falling output is a common definition of a recession, although economists at the Eurozone Business Cycle Dating Committee use a broader data set that includes employment data.
The committee said the job market was likely to hold relatively well despite output shrinking in the winter, with the unemployment rate expected to rise from 6.8% this year to 7.2% next year and fall to 7% in 2024.
[ad_2]
Source link
