Forecasts Of The Situation In The Eurozone Are Not Very Good

At the beginning of the week, the European Union will share the most important indicators.

Europe faces a difficult and uncertain geopolitical and economic outlook.

Inflation remains too high for a long time. Actions in the field of montage policy do not bring the expected results. However, the fight against inflation is expected to be painful. High interest rates can reduce demand, investment and employment, causing the economy to slow.

The ECB seems determined to overcome these fears and fulfill the bank's main mandate of price stabilization, a goal that has turned into a difficult struggle in the Ukrainian war and the energy crisis.

Core CPI

The change in the price of goods and services purchased by consumers, excluding food, energy, alcohol, and tobacco is expected to reach level of 4.8%.

The fight against inflation continues. And the situation of the eurozone does not seem to be getting better. The geopolitical situation, which is the war in Ukraine, which directly affects the member states, still threatens the economic situation. The base CPI indicator also shows this significantly as it has been growing significantly since May. The expected level of 4.8% is the result of the previous reading, so we can believe that the actions of the European central bank may have eased the situation.

CPI

Although the core CPI remains below 5%, the Eurozone Consumer Price Index is expected to rise to 10.2%.

The Baltic countries continue to be the hardest hit; Estonia in particular is experiencing the highest levels of inflation in the eurozone.

Such a high level is significantly influenced by the situation of energy prices. It is obvious that as a result of the war in Ukraine difficulties have arisen in Euroland with energy. There is no sign of an improvement in the energy crisis, as Russia said in September that it would not fully resume gas supplies to Europe until the West lifts sanctions imposed on Moscow over its invasion of Ukraine.The central banks of the member states are doing what they can to fight inflation. The ECB has the greatest impact on the fight against inflation. The ECB tries to bring the inflation level back to stabilization. Following in the footsteps of its counterparts elsewhere in the world, in July, the European Central Bank raised interest rates by more than expected amounts for the first time in 11 years as it pursues persistently high inflation.

Everything is going up: electricity, diesel, vegetables, the Internet, hotels, flights, and now interest rates as well. The only question is whether such a state of affairs leads to a recession in the euro area.

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Source: investing.com

GDP

The surprisingly positive forecast is for gross domestic product, which is expected to reach 1.0%.

Despite the positive data, it should be expected that the worst is still to come. Some economists are of the opinion that a recession is already in Europe.

Recession in the eurozone now appears likely as a result of the deepening gas crisis. Economic activity in the euro area declined even more in October, and Germany, the EU's largest economy, appears to be headed towards a recession. Higher interest rates tend to mean a decline in economic activity as credit becomes more expensive and consumer spending decreases.

Source: investing.com