Economists Foresee an EU Slowdown

On Monday, Morgan Stanley, an American multinational investment bank, reported that its forecast for the EU’s Gross Domestic Product (GDP) in 2022 and 2023 has decreased, adding that the economic. Economic growth indicates an imminent slowdown resulting from geopolitical pressure.

RELATED:
EU Extends Its Citizens' Coronavirus Certificate Validity

In Monday's release, the multinational bank said that the 2022 euro area GDP growth forecast had decreased from 3 percent to 2.7 percent. The forecast for the European Union economy for the next 2023 has been reduced o 1.3 percent from its previous 2.3 percent.

“Despite the resilience in economic activity shown so far against geopolitical headwinds, we think more material impacts will show in the second half of the year, through various channels of transmission,” said the note from Morgan Stanley.

The institution said that the decrease in the economic growth of the EU is the result of the reduction of the flows of energy from Russia, which represents a critical product for many European industries and businesses. As an expansion of the sanctions on Russia in response to the current special military operation on Ukrainian soil carried out by Moscow forces, the EU has been considering carrying out an embargo on crude oil and natural gas.

According to experts, banning Russian energy supplies would share the prices even higher than they are now across countries of the European Union, taking the bloc into recession.

Morgan Stanley considers that the bloc's economy could be affected by the economic slowdown in China caused by Beijing’s strict measures intended to contain the current COVID-19 infections surge in the country.