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Saturday, 28 January 2023
Worries More About Recession Prospects In Europe, Global Growth To Take A Hit From Ukraine War

Worries More About Recession Prospects In Europe, Global Growth To Take A Hit From Ukraine War

2022-10-31

The European recession is intensifying and will only get worse, according to economists and market watchers. The current downturn is being fueled by a number of factors, including lower oil prices, the fall in value of the euro, and the slowdown in global economic growth. But the most worrying aspect is the prospect of an even more prolonged downturn. There are several reasons for this.

These worries are more intense in the EU, especially in the east. The region has been hit particularly hard by the slowdown in global growth, with many economies contracting for a third year in a row. This has led to a drop in demand for the exports of European companies. Moreover, the current string of political and military events in the Middle East and Central Asia has increased global tension. The result is that Europe is likely to suffer from a protracted recession that could get worse before it gets better.

In this article, we take a look at what the European recession could mean for the global economy and outline some of the risks.

What will happen to global growth?
The global economy grew at an average of 3.4% during the seven years from 2007 to 2013, which was the height of the great financial crisis. This rate of growth is expected to fall to 2.6% in the next two years. This slowing down of the global economy is a major risk to the rest of the world, sparking concerns that the world is back in a recession.

In order to avoid a repeat of the Great Recession, which saw world growth fall by an average of 8.2%, economists recommend that the world’s leading nations keep their output growth rate below 3%.

The European Recession Is The Beginning Of The End
The annual growth rate of the eurozone will fall to just 0.1% in the next two years. If this rate of decline continues then the European Union will be back in recession in 2021.

Not only will this have a knock-on effect on global growth, but it will also have a big impact on investor confidence. This can have a big effect on the entire global economy since confidence is helpful in creating new businesses and hiring new workers.

The Current Downturn is set to get bad before it gets better
The European Commission has forecasted that the current downturn will be the longest in Europe’s history. This could mean that the recession is a lot deeper and more widespread than previously feared. The commission believes that the current downturn is likely to be the deepest in Europe’s history.

This is worrying because it could mean that the European Central Bank (ECB) may have to cut interest rates by another quarter percentage point to ensure a stronger recovery.

The Coming Middle Eastern And Central Asian Crises Could Be The Worst Thing That Ever Happened To Europe
Europe is set to feel the impact of the current political and economic unrest in the Middle East and Central Asia. There has been concerns that instability in these regions could spread to Europe, especially since civil war has been raging in Syria for years.

In the last year alone, over 50 countries have seen political unrest. This has had a significant impact on world stock markets. Moreover, the uncertainty caused by these political and military events is expected to slow down global growth.

Europe is set to suffer from a protracted recession that could get worse before it gets better
The European economy is forecasted to contract by 0.5% this year, but the overall picture is unclear as rising oil prices and the fall in the value of the euro are expected to make growth less than average.

This means that while the current downturn is set to last longer than expected, it is also possible that it will slow down global growth. This could mean that it is possible to avoid a European recession.

What Can Be Done To Prevent A European Recession?
In order to avoid a European recession, the ECB has to keep interest rates as low as possible. But this requires political agreement. So far, the ECB has been unable to cut interest rates below 3% because of the strong opposition from German financial market players.

In addition, in order to avoid a European recession, the ECB has to ensure that inflation stays below 1%. But with consumer prices rising at a steady rate of 2%, this is not guaranteed.

An economist at Deutsche Bank told the press “Inflation is going to stay above the ECB’s target because the economy is not growing, and the only way to grow is to increase consumer demand.”

Conclusion
The European recession is intensifying and will only get worse, according to economists and market watchers. The current downturn is being fueled by a number of factors, including lower oil prices, the fall in value of the euro, and the slowdown in global economic growth. But the most worrying aspect is the prospect of an even more prolonged downturn. There are several reasons for this.

These worries are more intense in the EU, especially in the east. The region has been hit particularly hard by the slowdown in global growth, with many economies contracting for a third year in a row. This has led to a drop in demand for the exports of European companies. Moreover, the current string of political and military events in the Middle East and Central Asia has increased global tension. The result is that Europe is likely to suffer from a protracted recession that could get worse before it gets better.

In this article, we take a look at what the European recession could mean for the global economy and outline some of the risks.

 

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