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    How EU energy policies could mitigate the coming recession [GGP]

Summary

The European Union faces recession, but the way in which policymakers manage the energy crisis will determine its depth and duration.

by: Zsolt Darvas, Marie Le Mouel, Simone Tagliapietra, Jeromin Zettelmeyer - Bruegel

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Complimentary, Natural Gas & LNG News, Europe, Global Gas Perspectives, Political, Market News, News By Country, EU

How EU energy policies could mitigate the coming recession [GGP]

Expectations of euro-area growth and inflation have deteriorated steadily since Russia’s invasion of Ukraine. Figure 1 shows the euro area’s slide towards expected stagflation. The European Central Bank now projects 2023 inflation at 5.5%, up from 3.5% in its June 2022 projections. Forecasts from the Organisation for Economic Co-operation and Development and the International Monetary Fund put it even higher, at around 6%. The ECB and IMF (and Consensus Forecasts) also foresee only barely positive growth in 2023, while scenarios in which the Russian gas supply to the European Union is cut completely indicate a recession with a 1% GDP decline in 2023. Since most of this supply cut has now happened, 2023 developments can be expected to be closer to the recession scenario than to the institutions’ baseline forecasts.

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