EU growth: Brussels faces economic crisis as data suggests crushing recession | World | New
Russia: TV host says Europe wants revenge for historic defeats
European Union (EU) and eurozone GDP grew by 0.6% between April and June this year, according to a flash estimate produced by the EU’s statistical office, Eurostat. . This represents a slight downward revision from the preliminary estimate published a month ago, and many analysts predict that the European economy will start to contract by the end of the year.
Europe is the region most directly affected by the fallout from the Russian invasion of Ukraine.
As well as sharing thousands of miles of land borders, Europe has long been dependent on Russian imports of crude oil and natural gas, the prices of which have soared in the wake of sanctions.
During the second quarter of 2022, the economic output of the 19 countries that use the euro as their currency – the euro zone – increased by only 0.6%, against 0.7% expected just a month ago.
For the EU as a whole, GDP also grew by 0.6%, according to data released today by Eurostat.
GDP growth in Europe slows as fears the bloc is heading for recession loom
European Commission President Ursula von der Leyen presented the EU’s winter gas saving plan in July
A year ago, in the same quarter, seasonally adjusted GDP rose 3.9% in the eurozone and 4% in the EU as the bloc emerged from the pandemic.
In the first quarter of 2022, GDP increased by 0.5% in the euro area and by 0.6% in the EU.
While these numbers remain positive, the current supply chain and energy crises, and the runaway inflation they are causing, have led many to suggest that Europe is heading into a recession.
Published in July, the European Commission’s Summer 2022 Economic Forecast predicted growth of 2.7% for the EU economy in 2022 and 1.5% in 2023.
READ MORE: Inflation in Europe and around the world: Data shows major crisis looming
Germany, the EU’s largest economy, stagnated between April and June this year
GAS SUPPLY: After being completely shut off for 10 days, gas flow is 20% of standard
The supply of vital gas via the Nord Stream 1 gas pipeline between Russia and Germany has now been reduced to 20% of its pre-invasion level.
The European Commission has joined a growing number of economists in warning of a recession at the end of 2022 if the gas supply were to be completely cut off.
Paolo Gentiloni, Commissioner for the Economy, said: “In Europe, the momentum of the reopening of our economies should support annual growth in 2022, but for 2023 we have revised our forecast significantly downwards.
“With the course of the war and the reliability of gas supplies unknown, this forecast is subject to high uncertainty and downside risks.”
DO NOT MISS :
Aldi staff are making a desperate appeal to anyone shopping in stores [BREAKING]
Putin and Xi prepare for ‘extremely disturbing’ talks on war [ANALYSIS]
SNP spends £20m on electric police cars… with no chargers [REVEAL]
US airline orders 20 Concorde-type jets to reduce travel times [REPORT]
Map of inflation rates around the world in July 2022
Record energy price inflation of 39.7% for the EU over the year would be the driver of the inflation of 8.9% announced for July by the bloc, against 8.6% in June, according Eurostat.
The Baltic countries, sharing a land border with Russia, have seen prices rise at a higher rate than any other EU country, with Estonia reporting 22%, Lithuania 20.5% and Latvia 19, 2%.
Many Eastern European countries follow, such as the Czech Republic (16.6%), Poland (14.2%) and Hungary (12.6 percent).
Western Europe has fared slightly better, but is also facing some of its highest inflation rates in decades.
The sharp rise in prices means that consumers are able to spend less on goods and services in the economy, further increasing the risk of recession.
EU and Eurozone growth in the second quarter was mainly driven by relatively strong GDP growth of 1.1% in Spain in the quarter and 1% in Italy.
By contrast, Germany’s economy, the largest in the bloc, stagnated, posting zero percent growth for the quarter, dragging the EU average down considerably.
Latvia, Lithuania, Poland and Portugal all saw their economies contract during the three-month period.
Last week, the Office for National Statistics (ONS) revealed that UK GDP fell 0.1% in the April to June quarter, while US GDP fell 0.2% in the of the same period.
The International Monetary Fund (IMF) World Economic Outlook Update released in July, titled Dark and more uncertainpredicted that global economic growth would slow to 3.2% this year, from 6.1% in 2021.
The report states: “The risk of recession is particularly significant in 2023, when in several economies growth is expected to bottom out, household savings accumulated during the pandemic will have declined, and even small shocks could stall economies. savings.
On July 26, the EU renewed its economic sanctions against Russia until January 31, 2023.
Since then, the European Central Bank has projected the bloc’s inflation rate to average 6.8% for 2022, falling to 3.5% for 2023 and 2.1% in 2024.