Research Briefing | May 3, 2022

Eurozone recession, not there for now, but risks are rising

Research briefing: eurozone recession, not there for now, but risks are rising

Growth risks for the eurozone economy are leaning to the downside, according to our analysis. Our business cycle indicator and recession probability model show that the economy is nearing a peak, which, based on previous historical episodes, suggests that risks of a recession in the near future are rising. However, these approaches provide an indication of the direction of travel, rather than a precise prediction. Accordingly, we have revised down our 2022 GDP forecast and will do that again in May. That said, the most likely scenario is still of solid growth.

What you will learn:

  • A traditional probit model points to rising risk of recession in the next six months.
  • Consumers are being squeezed by surging inflation, weighing on purchasing power and their willingness to spend.
  • The risk of a downturn in the industrial sector is high, as it faces an extended period of supply-chain disruptions and high energy prices.

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