EU economics chief says Europe is gripped by a ‘double crisis’ — but it can avoid a recession

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Europe is facing the impact of a “double crisis,” but the region can avoid a recession, Paolo Gentiloni, the European Commissioner for economic affairs, told CNBC on Saturday.

“I think we are we facing the impact of the double crisis,” Gentiloni said in reference to the geopolitical impact from Russia’s full-scale invasion of Ukraine and the subsequent economic hit to the European continent.

“From a geopolitical point of view, [the crisis] impacted also, of course, the U.S. and all the world, but from the economic point of view, it impacted seriously Europe and Germany in particular,” he said.

Russia’s invasion of Ukraine in February last year sparked serious fears in Europe that the region would enter a significant economic slowdown.

However, the region has since been able to secure alternative energy supplies, which until then primarily came from Russia, and some governments were able to provide relief to consumers facing high energy costs.

The euro area, in the end, grew at a rate of 3.5% in 2022, according to the International Monetary Fund. The IMF expects the eurozone to grow at a rate of 0.8% this year, and 1.4% by 2024. They will give an indication of the growth picture in the area.

However, recent economic data has raised concerns about a slowdown. For instance, European business activity contracted during August, to its lowest level since November 2020.

Inflation has eased in recent months, but the latest set of data showed the headline figure stable in August from the previous month at 5.3%. Although lower than earlier in the year, the inflation rate is still above the European Central Bank target of 2%. “Why is our economy slowing down after a strong rebound following the pandemic?”