Recession Expectations Prevail in the Eurozone

According to the results of the survey conducted by Bloomberg, the probability of recession in the Eurozone has reached the highest levels since November 2020, as energy shortages further trigger inflation, which is already at record high levels.

Recession expectations prevail in the Eurozone. The estimated recession expectation in the Eurozone rose above the 50 percent level. The economic contraction expectation of expert economists participating in the Bloomberg survey in the next 2 quarters moved to 60 percent. In the previous survey period, this expectation was 45 percent. The interruption of natural gas shipments from Russia is expected to affect Germany, the largest economy in the Eurozone, the most, and growth in the German economy is expected to stall as of this quarter. The rise in the cost of living is having a negative impact on the region's companies and households. Russia's threats to halt energy shipments also raise concerns for the rest of the year. In addition, supply constraints are exacerbated by drought in the region. Inflation is expected to average 8 percent in 2022 and 4 percent next year, while survey participants expect inflation to reach the 2 percent target in 2024.