Contraction of the European manufacturing index, rising interest rates and… China are the three sources of the ominous forecasts for the European economy – Increased revenues from tourism and investments in Greece
By Chrysostomos Tsoufis
His prime numbers autumn show that the clouds of recession are thickening for good (and) over the European sky.
Its price oil continues its decline with Brent at $94, $30 lower than June 8 when it was at its peak for the summer at $124. WTI is even lower, at $88. THE August it was oil’s biggest bearish rally month since 2020 as recession fears multiply.
At the same time the European index processing contracted for the 2nd month in a row and hit a 26-month low and a 20-month low in Greece. The new orders of the industries are decreasing and thus they cannot sell the products they produce at greatly increased cost. According to several economists, all this is enough to justify a reduction in GDP in 3rd quarter of the year.
And as inflation gallops, the ECB is going to enter more dynamically in the “game” of the increase of from next week interest rates. A sharp increase in them – as many central bankers want along the lines of the US – will hurt growth even more. Yiannis Stournaras of course knows this and that is why he is a “member” of the other trend that wants a gradual increase in interest rates.
The third source of concern for analysts comes from the China. Restrictions imposed on various Chinese cities due to a renewed outbreak of the pandemic combined with the worst heatwave in a decade and a weakened real estate market are expected to make it very difficult for the Chinese machine to develop high speeds.
In this context, it is no coincidence that the Giannis Oikonomou opened his today’s briefing to journalists by speaking for almost 10 minutes about the strength that the Greek economy has developed. “Another economy in the position of the Greek one would have been brought to its knees,” the government representative emphasized.
However, Greece will be one of the few countries – if not the only one – that, at least for this year, will revise upwards the rate of growth of tourism. In the first 7 months, €4.3 billion of foreign direct investment flowed into the country, while last year it was €4.8 billion for the whole year, while exports now make up 40% of the country’s GDP, having doubled their percentage compared to the pre-pandemic period.
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