The European Commission lowered its forecast for economic growth next year, saying 19 countries that use the euro currency will slide into recession over the winter as peak inflation lasts longer than expected and high fuel and heating prices undermine consumer purchasing power, AP reported.
The European Commission’s fall forecast predicts a drop in economic output in the last three months of this year and the first months of 2023. It notes that high energy prices, rising costs of living, higher interest rates and overall EU uncertainty will cause the eurozone and most member states to slide into recession in the last quarter of the year.
The growth forecast for all of 2023 has been lowered to 0.3 percent from 1.4 percent. “Growth is expected to return to Europe in the spring as inflation gradually weakens its impact on the economy, the report said.
However, due to strong headwinds that are still holding back demand, economic activity will be suppressed.
Germany, Europe’s largest economy and one of the most dependent on Russian natural gas, is likely to have the worst performance next year.
German output is expected to fall by 0.6 percent next year.
Inflation will peak later than expected, closer to the end of the year, rising to an average of 8.5% in 2022 and 6.1% in 2023 in the eurozone.
Two consecutive quarters of falling output is one common definition of a recession, although economists at the eurozone Business Cycle Dating Committee use a broader set of data, including employment figures.