Thanks to the energy crisis sparked by Russia’s war in Ukraine and resulting Western sanctions, at least half of the 19 countries sharing the euro currency will enter a recession, Kristalina Georgieva, managing director of the International Monetary Fund, said in a 27 October Euronews interview.
“One year ago, we were recovering from COVID and we finished with over 6 percent global growth,” she pointed out. “Then two shocks: Omicron [a COVID variant] and Russia’s war in Ukraine have not only interrupted the recovery but reversed it.”
Economic growth also is grinding down in Asia and the U.S., she added.
However, “Europe is affected more severely by the increase in energy prices,” she said. “The heat on European economies is such that we expect half the countries in the Eurozone to experience at least two consecutive quarters of negative growth”—in other words, a recession.
“To give a sense as to how significant the hit on Europe is, our pre-[COVID] projections and our current projections differ by half a trillion euros,” she noted. “The loss to the European people is quite, quite dramatic.”
Overall, the region’s economy will expand by 3.1 percent this year but only 0.5 percent in 2023, the IMF believes. Next year, Germany’s GDP will shrink by -0.3 percent, Italy’s by -0.2.
“I’m not going to sugar-coat it: 2023 will be tougher than 2022,” she said.
Next winter for Europe may be even harsher than this winter, Georgieva warned.
“European policymakers acted very swiftly to fill gas storage” ahead of this winter, she said. “If conditions remain as they are with Russia not providing gas to Europe, how is this gas storage going to be filled next year?”
Russia also faces long-term damage of its own for three reasons, she emphasized.
“One, it is losing access to technology that would have helped the country to modernize,” Georgieva said. “Two, it’s losing people,” especially “highly-qualified Russians” who are fleeing the country because of the war.
“Three, Russia is losing its role in the global economy,” she concluded.
TREND FORECAST: We forecast all, not half, of the Eurozone will dive into Dragflation: Negative GDP and rising inflation.
And as for IMF prediction that Russia “is losing access to technology that would have helped the country to modernize,” pulling away from globalization will benefit, not hurt Russia as they trend toward self-sufficiency.
Indeed, we have forecast that as a result of the sanctions and strong anti-Russian sentiments spread by the Western governments and the media, Moscow will be leading the anti-Globalization trend by embracing one of our Top 2022 Trends, Self-Sufficiency.
More than just home-grown chip production, Russia has the human and natural resources to be on its own and live on its own at very high levels by making what it needs rather than importing products, goods and services.
Also, with over 1,000 Western firms exiting the nation, the gaps will be filled with “Made-in-Russia products” with their national style, taste, look and flare.