Quick Bites | Eurozone bounces back

Eurozone likely to avoid recession  

Since New Year’s Day, global sharemarkets have risen sharply, largely driven by 3 big stories:

  1. Inflation appears to have peaked.
  2. China will drive growth post zero-COVID.
  3. A Eurozone recession might be avoided.

Today’s quick bite has a brief look at the turnaround in sentiment regarding the Eurozone economy.


As recently as last month, analysts were predicting the Euro bloc would plunge into recession this year. But a new survey now expects it to experience low but positive growth over 2023. This is attributable to lower energy prices, huge government support and the reopening of the Chinese economy, which is set to boost global demand.


We had feared Europe would be hard-hit due to its exposure to the economic consequences of Russia’s invasion of Ukraine, and its reliance on Russia’s energy exports. But it has successfully circumvented the worst consequences by filling up gas storages, importing energy from new sources, reducing usage and amping up energy alternatives. A mild winter has also helped.

European economies bounce back

Source: Financial Times

According to UBS, there is now less than a 30% chance of recession, down from an estimated 90% just 6 months ago. China’s reversal of its zero-COVID policy was a big factor: China is Germany’s largest trading partner. While the downturn will not be as deep as previously thought, the eurozone economy probably will still contract for two successive quarters, meeting the technical definition of a recession – but it is likely to grow mildly over the calendar year. This is certainly a good turnaround from previous expectations.


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