Mr. Paolo Gentiloni, the EU economics chief, through an interview with CNBC stated his concern on the EU double crisis; the Russia-Ukraine war and the EU economic recession, which has the most impact on Germany.
According to the IMF, the eurozone economy or Real GDP grew by 3.5% in 2022 which is more than the US and China, but it is expected at 0.8% in 2023 and 1.4% for 2024, which is a very low rate.
The European Union had strong rebound after the pandemic, but growth started to slow down since Q4 last year due to energy independence from Russia. Still, Paolo said that the recession is avoidable.
Since last year, the EU has secured more and more alternative energy supplies apart from Russia which helps cooling down this year’s inflation recently. The EU’s inflation in August was at 5.3%, which is a half of its peak over 10% in October last year, but still more than double of the 2% target.
However, the EU’s flash composite purchasing managers’ index (PMI) published in August has been trending down, falling to 47.0 from 48.6 in July, indicating the lowest level since November 2020. This points to the low activity of the EU economy.
