Europe is going through the impression of a “double disaster,” but the area can avoid a recession, Paolo Gentiloni, the European Commissioner for financial affairs, advised CNBC on Saturday.
“I believe we’re we going through the impression of the double disaster,” Gentiloni stated in reference to the geopolitical impression from Russia’s full-scale invasion of Ukraine and the next financial hit to the European continent.
“From a geopolitical standpoint, [the crisis] impacted additionally, after all, the U.S. and all of the world, but from the financial standpoint, it impacted significantly Europe and Germany specifically,” he stated.
Russia’s invasion of Ukraine in February final 12 months sparked severe fears in Europe that the area would enter a vital financial slowdown.
However, the area has since been capable of safe various power provides, which till then primarily got here from Russia, and a few governments had been capable of present aid to customers going through excessive power prices.
The euro space, in the long run, grew at a rate of 3.5% in 2022, in keeping with the International Monetary Fund. The establishment expects a progress price of 0.8% for the euro zone this 12 months and 1.4% in 2024.
“We had a superb 2022, increased progress than the U.S. and China,” Gentiloni advised CNBC’s Steve Sedgwick on the Ambrosetti Forum.
“The slowing down began from the final quarter of 2022 and it is there, but please do not name this a recession, as a result of I believe we can avoid a recession, we’re avoiding recession,” he stated.
‘Energy independence’ problem
The European Commission, the chief arm of the EU, is publishing new financial forecasts for the entire area on Sept. 11. They will give a sign of the expansion image within the space.
However, latest financial information has raised considerations about a slowdown. For occasion, European enterprise exercise contracted throughout August, to its lowest level since November 2020.
Inflation has eased in latest months, but the newest set of information confirmed the headline figure stable in August from the earlier month at 5.3%. Though decrease than earlier this 12 months, it is nonetheless properly above the European Central Bank’s goal of two%.
“Why after a sturdy rebound after the pandemic is our financial system slowing down? I believe due to the problem to realize power independence, which was very expensive for our households and fueling inflation,” Gentiloni stated.
