This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.
Author: Kate Whiting, Senior Writer, Formative Content
- Global economic growth will slow to 3.2% this year from 6.1% in 2021, the IMF predicts.
- Europe’s economy is being particularly impacted by the war in Ukraine – because of the rising cost of energy.
- These charts from the European Commission’s Eurostat office provide a snapshot of the economic outlook in the Eurozone and wider EU.
Fears of a global recession are growing, as supply chain disruptions cause soaring inflation and a cost-of-living crisis.
In July, the International Monetary Fund (IMF) World Economic Outlook Update was entitled Gloomy and More Uncertainwith a prediction that global economic growth would slow to 3.2% this year from 6.1% in 2021.
“The risk of recession is particularly prominent in 2023, when in several economies growth is expected to bottom out, household savings accumulated during the pandemic will have declined, and even small shocks could cause economies to stall,” the IMF warned.
The official definition of a recession is two consecutive quarters of declining GDP. But high unemployment is another key indicator.
The war in Ukraine is having a particular impact on European economies, due to their proximity and reliance on natural gas from Russia, which is raising the risk of recession.
But is that playing out yet?
Here is a snapshot of the economic situation in Europe, based on the latest charts from the European Commission.
GDP growth in the Eurozone
Preliminary estimates show that GDP is set to grow in the EU. Image: Eurostat.
A Eurozone GDP increase of 0.7% has been predicted for the second quarter (compared with the first quarter) by the European Union’s statistical office Eurostat. Its “flash estimate” foresees a rise of 0.6% in the wider EU.
GDP growth in the first quarter was 0.5% in the euro area and 0.6% in the EU, again compared with the previous quarter.
However, Eurostat’s preliminary flash estimates are based on “data sources that are incomplete and subject to further revisions”.
Unemployment in the EU
How unemployment rates compare between the Eurozone and wider EU. Image: Eurostat.
Unemployment in both the Eurozone and the EU appears to be stable, according to the latest Eurostat data, which runs to the end of June.
The seasonally adjusted unemployment rate was 6.6% for the euro area and 6% for the EU in June, down from 7.9% and 7.2%, respectively, a year earlier.
But the youth unemployment rate is higher. It was 13.6% in both the EU and the Eurozone, up from May figures of 13.3% and 13.2%, respectively.
Unemployment is slightly higher for women, at 6.4% in the EU in June, compared with 5.7% for men. Both figures were stable compared to May.
Inflation in the euro area
Energy prices are fueling inflation. Image: Eurostat.
Annual inflation in the Eurozone is expected to be 8.9% in July, according to Eurostat’s flash estimate published on 28 July. This would be up from 8.6% in June.
Energy inflation is expected to be 39.7%, down from 42% in June. And food, alcohol and tobacco prices are seen rising by 9.8%, up from a jump of 8.9% in June.