Brussels – The ‘Eurozone’, consisting of Europe’s 20 top economies, has been hit by recession. The three months from January to March of 2023, following the last quarter of 2022, also saw a decline in the eurozone economy. Whenever the growth rate of an economy shows negative growth for two consecutive quarters, that economy is considered to have slipped into recession. The Russia-Ukraine war and the ‘Cost of Living Crisis’ have been seen as two issues responsible for the Eurozone’s economic slowdown.
Last month Germany, Europe’s top economy, was hit by a recession. Germany’s economy is dependent on exports. During the Corona pandemic, the exports of this country started declining. Meanwhile, Germany’s production sector was disrupted by a raw materials and labour shortage. After this, due to the Russia-Ukraine war, the fuel supply to Germany was also disrupted, and there was a surge in inflation in the country. Due to these reasons, the German economy had slipped into recession, over which economists and analysts had drawn attention.
Since Germany is Europe’s largest economy, the possibility of its recession likely harming the European economy was voiced only last week. It appears to have been clearly confirmed by the figures released by the European Union. According to the information released by the Eurostat system, the economy of the Eurozone has slipped by 0.1 per cent for two consecutive quarters.
High inflation and interest rate hikes by the Central Bank have reduced the spending power of European customers. It has harmed the production, real estate and retail sales sectors of the European countries. It has reduced the possibility of European countries coming out of the situation soon. Economists and analysts claim that a recession-like situation will continue into the year 2023.
Earlier, during 2008-09, Europe was hit hard by the economic recession during the Great Depression experienced worldwide. During this period of recession, the debt burden on the European economy increased to a great extent. As a consequence of that debt burden, during the years 2011 to 2013, the European Union faced the ‘Debt Crisis’. This economic crisis started in Greece and reached major countries like Spain, Ireland, Italy and Portugal. As a result, a recession-like situation emerged in the European Union.
Campaigns to abandon the euro currency strengthened, with several major European countries exiting the EU bloc. In the wake of these events, along with Germany and France, political groups of right-wing ideology emerged in many European countries. Europe’s ‘debt crisis’ is also said to have been the reason behind the campaign for the UK to walk out of the European Union (Brexit). Considering these past events, the recession in the Eurozone assumes much significance.
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