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Recession in Europe: what to expect?

  • Post category:Economy News
  • Reading time:6 mins read

Major institutions such as the International Monetary Fund (IMF) and the Federal Reserve are categorical: the world is on the verge of a recession. Has it already started in Europe and what are the forecasts for 2023? We take stock.

Europe: has the recession already started?

The economic situation in Europe is at a tipping point. The Old Continent is currently experiencing the concrete consequences of the management of Covid-19, the war in Ukraine and the energy crisis. In dire straits, the European Central Bank raised its rates, and could make this choice again at the end of October.

Faced with this, some consider that Europe is already in recession. This is the case of Jamie Dillon, CEO of JP Morgan, who explained last week:

β€œThere are very serious reasons that could push the United States and the world – Europe is already in recession – into some kind of recession within six to nine months. Β»

As a reminder, a recession occurs when the economic activity of all the sectors of a geographical area slows down sharply. With, very often, waves of layoffs and rising unemployment. According to recent predictions by the Organization for Economic Co-operation and Development (OECD), Europe will experience the most marked changes, with growth of only 0.3% in 2023.

πŸ‘‰ To go further – Purchasing power and cryptocurrencies: can they help protect against inflation?

The world’s CEOs brace for a recession in Europe

This, of course, has not escaped the notice of the leaders of major global corporations, who are preparing for a recession. According to a Conference Board report, 99% of CEOs surveyed, who came from 60 different countries, had already prepared for a recession in Europe.

A prediction shared by the OECD, which explained in its report that the temperatures of this winter – with the dependence on Russian gas – would strongly influence the extent of the recession to come. As far as the German economy is concerned, the institution even expects a decline in growth of 0.7%.

Last week, an IMF report was equally pessimistic. Pierre-Olivier Gourinchas then explained:

” To summarize, the worst is yet to come. […] For many people, 2023 will look like a recession. Β»

πŸ‘‰ On the same subject – Germany on alert: the Minister of the Economy announces a recession

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Perspectives and places of cryptocurrencies

So what to take away from all this? First of all, that 2023 will not be fun for all of the world’s economies. But also that the central banks are taken in a cycle from which they cannot easily escapeand reluctantly plan to successively raise their rates.

Confronted with this, will alternative assets like cryptocurrencies play their role ? As we have seen, Bitcoin (BTC) and its consorts showed characteristic flexibility when the Covid-19 crisis hit. Crypto-assets have the potential to come back into the limelight during the European economic slowdown in 2023… But only if investors see a major interest in it.

We have seen that in countries where hyperinflation reigns, particularly in South America, cryptocurrencies are naturally adopted by citizens who see an interest in them to protect their savings. Will the practice also become more democratic in Europe? The coming year will tell.

πŸ‘‰ Read also – 12% of Argentines have adopted cryptocurrencies to protect themselves from inflation

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Sources: OECD, Conference Board, IMF report

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