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EU says eurozone set to fall into recession this winter

November 11, 2022

The European Commission expects economic growth in the eurozone to contract. Recession is highly probable over the winter, as inflation is expected to drag on for longer than initially expected.

100 euro bills
The economic forecast in the eurozone looks gloomyImage: Andrei Barmashov/PantherMedia/image images

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.

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.

Growth expected 'in spring'

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."

Energy costs leave households fearing winter

rmt/wmr (AFP, AP)