Recession… surrounds Europe – What applies to Greece
When one of the most active and experienced sections in the world analyzes that “the European economy will show virtually no growth in the rest of 2022”, it is realized that the four weeks of the war and its economic tests have already managed to turn the tables. valid until the end of February. In fact, the situation could worsen further if the supply of Russian gas to Europe is completely cut off.
The reason for Citi, its analysts, see that the economy of the Eurozone will grow at a rate of 2.3% this year, while in the adverse scenario, growth will not exceed 0.7%. It is noted that the American bank forecasted 3.3% growth in February for 2022.
With the new data, the risk of a significant economic slowdown and a large rise in inflation has become a key scenario and it is not ruled out that the recession will knock on the door of Europe. As Citi points out, the recession ρίζει surrounds the Eurozone while the precursor economic indicators may soon predict a recession.
In contrast to the US, the risk of recession in Europe is significant, because inflation is not due to increased demand but to serious supply problems and, as a result, reduced demand.
The risk will be even greater if the worst-case scenario is confirmed and the flow of gas to Europe is completely stopped. As for inflation, Citi forecasts that it will reach 6.5% in the Eurozone for the whole of 2022, compared to 4.5% mentioned in the February estimate. Yesterday, Goldman Sachs set inflation in the Eurozone at 7.8% this year, estimating that it will weaken in 2023 and gradually return to the level of 2%.
What applies to Greece
Initial estimates for 4% and 5% growth in Greece in 2022 have already been downgraded to 3%. The data for the Greek economy is that GDP in any case will outperform the Eurozone and that inflation in our country will be slightly higher than the average. For example, growth of more than 4% is projected until 2023 in Greece, when in the Eurozone GDP is growing to run at a rate of 2.6%.
With the… time from 2021 and the 8.3% GDP growth, the Greek economy is estimated to show growth of more than 1% even in the unfavorable scenario that the Eurozone will flirt with the recession. In any case, the Greek economy in general to cover in 2023 and 2024 any lost ground of 2022 and to record growth in the three years that are similar to the estimates before the war. In other words, in the three years 2022-2024 the growth will exceed 10%, no matter how big the blow is this year.
On the inflation front, the situation is so critical that no measures of 2 billion were announced. euros to reduce the effects of the energy crisis (estimated to reach 4 billion euros in the whole year), inflation in Greece would reach 10% in March-April.
The probability of appearing in the USA increased by 10%
Finally, Citi is running a forecast model that shows that the probability of appearing in the US within the next year increased to 19% in March, from 9% in February. The risk may still be relatively small, but the increase is noticeable within a few weeks. At the same time, the probability of a recession for the next six months is 12%, much lower than in Europe. Nevertheless, the US Bank warns that the chances of a recession will increase as we go deeper into the interest rate cycle and the bond yield curve becomes smoother.
For stocks, Citi points out that the recent rise and the fact that during the war the stock indices are strengthening, indicate that they have discounted a stagnant inflation shock and that higher inflation “pushes” large amounts in stocks, something that only applies to the USA.