EU expects economic recession to hit Europe

Berlin, The Gulf Observer: The European Union’s executive commission slashed its forecast for economic growth next year for europe, saying the 19 countries that use the euro currency will slide into recession over the winter as peak inflation hangs on for longer than expected and high fuel and heating costs erode consumer purchasing power.

The European Commission’s autumn forecast released Friday predicts falling economic output in the last three months of this year and the first months of 2023.

The commission says high energy prices, a rising cost of living, higher interest rates and slowing global trade “are expected to tip the EU, the euro area and most member states into recession in the last quarter of the year.”

Going forward, the growth forecast for all of 2023 was lowered to 0.3% from 1.4% expected in the previous forecast from July.“The EU economy is at a turning point,” said Paolo Gentiloni, European commissioner for economy.

“After a surprisingly strong first half of the year, the EU economy lost momentum in the third quarter and recent survey data point to a contraction for the winter,” he told reporters in Brussels. “The outlook for next year has weakened significantly.”

The worst performer next year is likely to be Germany, Europe’s largest economy and one of the most dependent on Russian natural gas before the war in Ukraine. Germany was expected to see output shrink by 0.6% over the next year.