Eurozone Economy May Shrink This Year Due to Energy Crisis, High Inflation
Euro
Oleg BurunovEurope is trying to tackle dwindling fuel supplies from Russia, caused by Western countries’ tight sanctions against Moscow that were imposed shortly after the start of the special military operation in Ukraine in late February. The Eurozone economy is set to shrink this year due to high inflation and potential energy shortages, a UK media outlet has cited economists as warning.They argue that the single currency zone was already in recession, with gross domestic product expected to contract over the whole of next year.
WorldEuropean Commission Increases Inflation Forecast in EU From 8.3% to 9.3% in 202211 November 2022, 10:56 GMTMorgan Stanley economist Chiara Zangarelli claimed that “Gas markets in Europe remain a key risk,” adding, “Additional supply disruptions, or a particularly cold winter, could lead to renewed tensions and prices rising again, forcing another round of adaptation and demand destruction.”Even though EU members managed to lower their dependence on Russian gas imports by turning to Norway and the US as well as shifting to alternative energy sources, the economists have warned that without Russian supplies, it will be much harder to refill Europe’s gas storage facilities ahead of next winter.Carsten Brzeski, head of macro research at ING Bank, warned that “Gas storage levels are dropping quickly now,” and that “There is still the risk of an energy supply crisis this winter.” According to the expert, “Moreover, next winter will be even more challenging.”
Energy Crisis in EuropeWinter Is Coming: Cold Weather Finally Hits Europe Amidst Energy Crisis 10 December 2022, 12:37 GMTThe forecasts come a few weeks after a US news outlet reported that Europe “got hit by roughly $1 trillion from surging energy costs” amid the fallout of the ongoing Russian special military operation in Ukraine, adding that “the deepest crisis in decades is only getting started.”The EU, together with Britain and the US, started to slap packages of “severe” sanctions on Russia shortly after Moscow launched its special operation in Ukraine in on February 24. In December, the EU also joined the G7 decision to set a price cap on Russian oil at $60 per barrel, and rolled out its ninth sanctions package against Russia.The restrictions disrupted supply chains worldwide and exacerbated ongoing energy market issues, which in turn led to soaring oil prices. The result of the sanctions was an energy crisis in Europe, growing cost-of-living and record-high inflation, while the industry of the bloc was also put at risk.
