The 19 countries that use the euro currency will tip into recession over the winter, the European Union's executive commission predicted on November 11.
"The EU economy is at a turning point. After a surprisingly strong first half of the year, the EU economy lost momentum in the third quarter and recent survey data point to a contraction for the winter. The outlook for next year has weakened significantly,” Paolo Gentiloni, European commissioner for economy, told media.
Amid persistent inflationary pressures, the commission’s autumn forecast projected sinking economic output in the last three months of this year and the first months of 2023.
Soaring energy costs, rising costs of living, higher interest rates, and overall uncertainty “are expected to tip the EU, the euro area and most member states into recession in the last quarter of the year,” the commission stated. It also raised its forecast for annual inflation in the European Union from the previous 8.3 percent to 9.3 percent, according to the report.
"Higher-than-expected inflation readings throughout the first ten months of 2022 and broadening price pressures are expected to have moved the inflation peak to year-end and to have lifted the yearly inflation rate projection to 9.3% in the EU and 8.5% in the euro area," the message stated.
The growth forecast for all of 2023 was lowered to 0.3 percent from the 1.4 percent estimated in the previous July forecast.
“Growth is expected to return to Europe in spring, as inflation gradually relaxes its grip on the economy. However, with powerful headwinds still holding back demand, economic activity is set to be subdued,” the report said.
Germany, the most reliant on natural gas from West-sanctioned Russia, was singled out as likely to fare the worst. Output in Europe's largest economy was expected to shrink by 0.6 percent over the next year.
Increasingly dismal forecasts for the economic outlook on the European continent come as skyrocketing food and energy prices have been driven, in part, by Western sanctions that followed the launching of Russia’s special operation in Ukraine.
While aimed at reducing Moscow's energy exports to zero and "crippling" the Russian economy, the restrictions in effect left the Europeans on the losing end. Moscow, which had warned that sanctions would inevitably backfire, has been successfully securing new markets. Meanwhile, the self-inflicted fallout from the restrictions fuels fractures in the Western coalition propping up the Kiev regime.