The EU towards recession, in Italy the GDP at 0.3% (half of the government’s estimates)

Brussels. The EU economy is heading into a winter of recession, with a sharp contraction at the end of the year, but growth in 2022 proved stronger than expected in the face of the fallout from the war in Ukraine, according to reports. Autumn economic forecast presented by the Commission today. “The EU is among the advanced economies most exposed” to Russia’s war of aggression “due to its geographical proximity” and “heavy dependence on Russian gas imports”. However, in the first half of 2022, growth was strong. “The expansion continued into the third quarter, albeit at a considerably slower pace.” According to the Commission, in 2022 the EU’s GDP is expected to grow by 3.3 percent this year (3.2 percent in the euro area), well above the 2.7 percent of the summer economic forecasts. “The EU economy has shown great resilience to the shockwaves” of Russia’s war, explained the Commissioner for Economic Affairs. Paolo Gentiloni. It is in the fourth quarter that a recession is expected for both the EU and the euro area, which should continue in the first quarter of 2023. “Growth is expected to return to Europe in the springwhen inflation gradually loosens its grip on the economy, “the Commission said. Next year will be low growth: 0.3 per cent in both the EU and the euro area. It is from 2024 that GDP should recover, with an average of 1.6 per cent in the EU and 1.5 per cent in the euro area.

Beyond the growth the most worrying figures in the Commission’s forecast concern inflation and deficits. The EU executive sees the peak of inflation at the end of the year at 9.3 per cent in the EU and 8.5 per cent in the euro area. But inflation will also remain high next year: 7 per cent in the EU and 6.1 per cent in the euro area. As for the EU deficit, after a decline from 4.6 per cent of GDP in 2021 (5.1 for the euro area) to 3.4 per cent in 2022 (3.5 per cent in the euro area), next year it should return to growth to 3.6 per cent (3.7 per cent for the euro area). The Commission warns that its forecasts are marked by “an exceptional level of uncertainty” due to the Russian war against Ukraine and the risk of further economic disruption. “The greatest threat comes from adverse developments on the gas market and the risk of shortages, particularly in the winter of 2023-24. “Furthermore, the EU remains exposed to” shocks from other commodity markets. “Another risk factor is high levels of prolonged inflation and disorderly adjustments of financial markets due to rising interest rates. “Today’s forecasts are subject to multiple risks and uncertainties, but of one thing I am sure: if as Europeans we are able to stay united, we can successfully navigate these difficulties and emerge stronger, “Gentiloni said.

The same trends are registered for Italy, for which the Commission expects “a contraction this winter. Thanks to solid growth in the first three quarters of this year, real GDP growth is estimated at 3.8 per cent in 2022, before slowing to 0.3. per cent in 2023 and a recovery to 1.1 per cent in 2024 “. Data lower than those that the government has forecast in Nadef, which sees next year’s GDP at 0.6 percent.

For this year, however, the Italian economy is doing better than Germany (1.6) and France (2.6).. For Italy, the Commission’s projections do not take into account the policies announced by the new government of Giorgia Meloni. The main concern is the deficit, estimated at 5.1 per cent this year: according to the Commission, the reduction in the deficit is destined to stop in 2024, when it will rise again to 4.2 per cent. Debt reduction is also set to slow, from 144.6 per cent of GDP in 2022 to 142.6 per cent in 2024. Finally, there are also signs of a slowdown in employment. The unemployment rate is expected to rise from 8.3 percent in 2022 to 8.5 percent in 2024.