The eurozone is at risk of recession in 2023 in the event of a complete cut off of Russian gas deliveries, the president of the European Central Bank (ECB), Christine Lagarde, warned on Thursday.
At a press conference after the meeting of the Governing Council of the ECB, Lagarde explained that the “pessimistic scenario” of the forecasts prepared by the monetary entity, “including a total cut in Russian gas deliveries”, anticipates “a recession by 2023”.
In the central scenario, the ECB forecasts a growth of the Gross Domestic Product (GDP) of the euro zone of 3.1% this year, 0.9% in 2023 and 1.9% in 2024, when in June it projected a expansion of 2.8% in 2022 and 2.1% in 2023 and 2024.
However, in an adverse scenario, the central bank team forecasts GDP growth of 2.8% this year and a recession of 0.9% in 2023, followed by a recovery of 1.9% in 2024.
Regarding inflation, the adverse scenario foresees an increase to 8.4% this year (vs. 8.1% in the base case), falling to 6.9% in 2023 (5.5% in the base case). and 2.7% in 2024 (2.3% in the base case).
This scenario assumes that the war in Ukraine drags on and geopolitical tensions continue to be felt, with Russian gas deliveries cut off with little room to access alternative sources of gas supply.
Source: TSF
