European economies face substantial recession risk: poll

European economies received a poor bill of health in a survey of experts that showed elevated recession risks due to geopolitical conflicts and heightened energy costs.

In the euro zone, the chances of two consecutive quarters of declining output by year-end are highest in Germany and the Netherlands at 38%, according to a quarterly poll by the ifo Institute and the Swiss Economic Policy Institute. That compares with 26% in the US.

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The 20-nation bloc stagnated at the end of 2023, avoiding a recession by the slimmest of margins as firmer growth in Italy and Spain offset a downturn in Germany. The prospects for a quick turnaround are slim, with the European Central Bank predicting continued near-term weakness.

War continues to rage in Ukraine and Middle East tensions threaten to disrupt supply chains and energy deliveries all over again. Such uncertainty risks undermining spending and investment while prices pressures could pick up in response.

The survey, published Thursday, was conducted among 1 431 economic experts from 124 countries from December 7 to December 21, 2023.

© 2024 Bloomberg

William Murphy

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