Germany: The eurozone and most EU countries will head to an economic recession in the last quarter of 2022, according to the European Commission’s autumn economic forecast.
The European Commission is predicting the eurozone will slide into recession in the winter, as inflation continues to rise , according to the latest economic forecast released on Friday.
The forecast projected that high energy bills currently eroding consumer purchasing power will prolong inflation, which is expected to spike to 8.5% this year, then fall to 6.1% next year.
Growth forecast for 2023 was meanwhile lowered to 0.3%, down from July’s projection of 1.4%.
Germany is likely to be next year’s worst performer , with the country’s economic output predicted to shrink by 0.6% over the next year.
“The EU is among the most exposed advanced economies (to high prices), due to its geographical proximity to the war and heavy reliance on gas imports from Russia,” the European Commission said in a statement.
“The energy crisis is eroding households’ purchasing power and weighing on production.”
Europe’s largest economy was the most dependent on Russian gas before the Ukraine war, and it is grappling to find alternatives to Russian energy.
The Commission’s autumn forecast expects economic output to plummet in the remaining three months of this year, as well as the first few months of 2023.
High energy prices, increased cost of living and interest rates are all “expected to tip the EU, the euro area and most member states into recession in the last quarter of the year,” the Commission said.
“Growth is expected to return to Europe in spring, as inflation gradually relaxes its grip on the economy,” the report said. “However, with powerful headwinds still holding back demand, economic activity is set to be subdued.”
