- Russia’s full-scale invasion of Ukraine sparked serious fears in Europe that the region would enter a significant economic downturn.
- According to the International Monetary Fund, the euro zone ultimately grew by 3.5% in 2022.
- “The slowdown started in the last quarter of 2022 and it is here, but please don’t call it a recession because I think we can avoid a recession, we are avoiding a recession,” said Paolo Gentiloni, European Commissioner for Economic Affairs, said CNBC.
Europe is facing the impact of a “double crisis” but the region can avoid recession, Paolo Gentiloni, the EU’s economic affairs commissioner, told CNBC on Saturday.
“I think we are facing the impact of the double crisis,” Gentiloni said, referring to the geopolitical impact of Russia’s full-scale invasion of Ukraine and the resulting economic impact on the European continent.
“From a geopolitical perspective [the crisis] “It obviously also had an impact on the US and the whole world, but from an economic point of view it had a serious impact on Europe and particularly Germany,” he said.
Russia’s invasion of Ukraine in February last year sparked serious fears in Europe that the region would enter a significant economic downturn.
However, the region has now managed to secure alternative energy sources, until then mainly coming from Russia, and some governments have been able to provide relief to consumers struggling with high energy costs.
According to the International Monetary Fund, the euro zone ultimately grew by 3.5% in 2022. The institute expects a growth rate of 0.8% for the euro zone this year and 1.4% in 2024.
“We had an excellent 2022, higher growth than the U.S. and China,” Gentiloni told CNBC’s Steve Sedgwick at the Ambrosetti Forum.
“The slowdown started in the last quarter of 2022 and it is here, but please don’t call it a recession because I think we can avoid a recession, we are avoiding a recession,” he said.
The European Commission, the EU’s executive arm, will publish new economic forecasts for the entire region on September 11th. They will provide an indication of the growth situation in the region.
However, recent economic data has raised concerns about a slowdown. For example, European business activity shrank in August to its lowest level since November 2020.
Inflation has eased in recent months, but the latest data showed the overall figure was steady at 5.3% in August from the previous month. Although it is lower than at the beginning of the year, it is still well above the European Central Bank’s target of 2%.
“Why is our economy slowing after a strong post-pandemic recovery? I think because of the challenge of achieving energy independence, which was very costly for our families and fueled inflation,” Gentiloni said.