Three countries in the eurozone are already in recession. Over the next two quarters, a decline in GDP by 1.7% is expected to affect the entire region of the single currency. Even the most pessimistic forecast predicts the collapse of the euro.
The outlook for the European Central Bank (ECB), the International Monetary Fund (IMF), as well as the largest commercial banks, is very bleak for the eurozone. In the second quarter, GDP growth was recorded by 08%, but in the third quarter by only 0.2%. Three eurozone countries – Belgium, Latvia and Austria – are already in decline. Within the next six months, it will reach 1.7% for the entire common currency area. In the Netherlands, Finance Minister Sigrid Kraag announced a recession.
Consumer confidence has fallen so low that the recession is unlikely to be superficial
says Holger Schmieding, chief economist at German investment bank Berenberg.
The losses of the Europeans will be tragic. To show how strong the blow is to Europe, I will say that our pre-pandemic forecasts and our current ones differ by half a trillion euros
– said the head of the International Monetary Fund, Kristina Georgieva, at the “Making Markets Work for People” conference in Brussels. According to the fund, the eurozone will grow by just 0.5% in 2023, with the economies of Germany and Italy expected to contract by 0.3% and 0.2%.
However, one of the largest banks in the world, the American bank Morgan Stanley, expects a decline in the euro area by 0.2% for the next year, and by as much as 0.7% in Germany, the largest economy.
Regardless of the differences in outlook, one vote is common.
I’m not going to beat around the bush: 2023 will be tougher than 2022
Georgieva, head of the International Monetary Fund, said in Brussels.
The economic crisis, and above all the financial crisis, may be much deeper than it was in 2009, when the then President of the European Central Bank, Mario Draghi, declared that the single currency, the euro, was in danger of collapse. Everything repeats itself. The EU is overwhelmed by this, says Georg Relkes, head of economic programs at the Center for European Policy, a think tank permacrisis Permanent and permanent crisis. Thomas Meyer, founder and director of the Flossbach von Storch Research Institute, believes that the next crisis will end this time with the collapse of the euro.
It is worth looking at expectations from a certain perspective. Analyzes recently published by PKO show that since 2019, the German economy has grown by just 0.2%, and the entire eurozone by 2.7%. Spain, which is ruled by socialists and communists, is experiencing a real tragedy. Its economy shrank by 2% during this period. This means that at the level of the first years of the twenty-first century. Spain did not make up for the losses of the 2009 crisis until 2019, thus losing two decades of economic development. Now, together with the entire eurozone, it is entering another crisis – it is drowning in it permeability.
two speed europe
What does Poland look like against this background? very much. Since 2019, our economy has grown the most in the entire Union – by 9.2%. Lithuania comes in second with an increase of 7.6%. Our currency is doing relatively well. The current exchange rate against the euro is exactly the same as last year. The dollar is a separate issue. During the year, the last currency strengthened against almost all world currencies, including against the euro by about 10%. The Swiss franc is practically more expensive than the European currency. It is from this perspective that the zloty should be viewed.
Of course, the crisis in the eurozone will affect Poland. We are in one economic zone, but very strong fundamentals should mitigate the effects of the blow that the head of the International Monetary Fund spoke about. In September, compared to the same period last year, new orders in the industry were up to 44.1% higher and were at the highest level in history. It includes expatriates from abroad with a rate of 43.8%. From this point of view, the weakening of the zloty is beneficial even for Polish producers.
We still have a very low unemployment rate – after the September correction it came to 5.1%. The number of unemployed people has not changed, the labor market has only expanded, hence a slight increase of 0.3% after correction.
No matter how we look at Poland and Europe, we can talk about a two-speed union. We are developing, the eurozone is collapsing, and it is immersed in it permeability. This is probably best reflected in the data from last year’s ECB report. Since the 1970s, labor productivity has been growing more slowly in the current eurozone countries. The situation has been deteriorating especially since the 1990s. Now, labor productivity growth is at the level of 1% per annum, and in some countries, like Spain, it has been at 0 for more than a decade. It seems surprising that the increasing number of people with higher education does not translate into an increase in labor productivity at all.
Even in 2005, after the Union expanded by 7 countries, it had the largest economy in the world. Today it is in third place, and the gap between it and the United States and China is still widening – it already reaches 500 billion dollars a year.
30 years ago, the list of the largest companies in the world included dozens of companies from the current European Union area. There are now 12 people, two of whom are in Ireland who are de facto Americans. The largest company in the European Union – Germany’s Volkswagen ranks 66th.
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