“We could be heading for one of the toughest winters in generations,” the European economy minister said during a speech in Brussels.
THE “risk of recession is increasing” in the European Union, mainly due to the surge in energy prices due to the war in Ukraine, European Economy Minister Paolo Gentiloni said today.
“We could be heading for one of the toughest winters in generations,” he warned in a speech in Brussels.
“A number of red flags are flashing: energy prices hit new records, inflation is still galloping, the economic climate is worsening. And the Russian war continues,” he said.
Gas prices were at the end of August 15 times higher of those before the Covid-19 pandemic and almost doubled compared to July, when the European Commission released its latest economic forecasts, Gentiloni stressed, speaking at a Bruegel Center conference, while the brad-de -fer between the Europeans and the Russians is in full swing.
“The prospects essentially depend on the development of energy markets: are clearly downgraded relative to our reference scenario in the event of a complete disruption of Russian gas supplies,” he warned.
The European Commission had announced on July 14 its forecasts for an increase of 2.6% in the eurozone in 2022 and 1.4% in 2023. These forecasts were already reduced compared to previous estimates (2.7% and 2.3% respectively).
Gentiloni recalled that inflation broke a new record in the eurozone in August, reaching 9.1%.
The Economy Commissioner also referred to the PMI which showed a decline in activity in August, for the second consecutive month, in the 19 countries that share the single currency.
“Funding conditions are simultaneously tightening in Europe and globally. The euro fell below 1:1 parity against the dollar for the first time in 20 years, and developments in the United States and China suggest that external demand will remain weak.” , he insisted.
“However, it’s not all so bleak,” Gentiloni said, emphasizing the fact that growth was greater than expected at the beginning of the year.
The European Statistical Office (Eurostat) today revised upward the growth rates for the first and second quarters to 0.7% and 0.8% respectively in the eurozone.
“Labor markets are performing very well. Employment levels in the EU continued to rise in the second quarter (+0.4%). The unemployment rate fell further and in July was recorded at a record low of 6%,” Gentiloni said.
“And supply chain disruptions are easing, with port congestion in the United States and China easing significantly. These developments will reduce inflationary pressures. Therefore, inflation may have peaked,” he said. .
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