Sergey Tsukhlo, Head of the Business Surveys Department at the Gaidar Institute, in an interview with the Nezavisimaya Gazeta talked about the potential risk of a recession in the eurozone.
European analysts have some serious concerns in connection with the risk of sliding into a “soft recession” as a result of decreased energy supplies from Russia. According to their forecasts, if starting from July Germany discontinues buying Russian gas, the German economy will decline by almost 13%. Also, the German media discuss the risk of losing approximately 5.6 million jobs. Germany is considering a possible scenario of shutting down a number of industries, while the glass, steel, and food industries face the threat of losses. The inflation tax on Europeans is on the rise, while the quality of life is on the decline. However, according to experts, the shock wave from the downfall of the European economy may also affect Russia, and so some prompt preparatory measures are necessary.
“As of May, the inflationary expectations of German and French enterprises remain at record highs, although German industry may have already passed its peak values ​​of that indicator,” as follows from the Gaidar Institute review. Meanwhile, as Sergey Tsukhlo explained, “the tireless exercises of the G7 countries with their “sanctions dumbbells” “may further boost the price expectations of German enterprises, which are highly dependent on Russian exports.”
The Nezavisimaya Gazeta points out that, according to a study by Prognos AG, the prospects for the economies of Central and Eastern Europe directly depend on the situation in the German economy. In particular, Germany is the most important sales market for the Czech Republic, Poland, Hungary, Romania, and Slovakia. Therefore, the assumptions as to a possible European recession following the economic downturn in Germany appear to be justified.
For Russia, it is important to minimize the negative economic effects of the expected recession across Europe, because it can lead to a global recession and provoke a decline in the demand for Russian raw materials exports around the world.