For 2023 as a whole, the Commission expects growth of 0.3 percent for the euro zone – after 3.2 percent this year.
(Photo: IMAGO/Chris Emil Janssen)
Brussels The EU Commission expects the euro zone to slide into recession in winter. According to the authority’s fall forecast, the currency area’s economy is expected to contract in the fourth quarter of 2022 and the first quarter of 2023.
The EU Commission announced on Friday that the high energy prices and the falling purchasing power of households would lead to a decline in economic power in the two quarters. Two consecutive quarters of negative growth are defined as a recession. From the spring, however, the euro zone is expected to start growing again.
For 2023 as a whole, the Commission expects growth of 0.3 percent for the euro zone – after 3.2 percent this year. Germany ends up in last place. The German economy is expected to shrink by 0.6 percent in the coming year. Slovakia took first place with 7.5 percent growth, Greece 6.3 percent and Malta 4.0 percent.
In the summer, the EU Commission had still expected growth of 2.6 percent for the euro zone this year and 1.4 percent in the coming year. For this year, the authority revised its expectations upwards due to the surprisingly strong tourism boom in southern Europe.
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After a strong first half of the year, however, the economy has now entered a more difficult phase, the authority explained. Due to the war in Ukraine, the economic prospects are associated with an exceptionally high degree of uncertainty. For the first time since the Russian invasion of Ukraine, she is warning of a recession in the entire currency area. In their most recent forecasts, the International Monetary Fund and the federal government had already predicted a recession for Germany in the coming year.
Better outlook for inflation
Inflation is projected to remain high in the coming year before falling significantly in 2024. The inflation rate in the euro zone is expected to average 8.5 percent this year and fall to 6.1 percent in the coming year. In 2024, the Commission expects inflation to be 2.6 percent. This would already be close to the European Central Bank’s (ECB) long-term inflation target of two percent.
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In Germany, inflation is expected to be 8.8 percent this year and 7.5 percent next year. According to the forecast, it should fall to 2.9 percent in 2024.
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