Private sector activity surveys have shown that a recession in the eurozone looks increasingly likely as the economic contraction continues in the fourth quarter of the year. Meanwhile, the global trade outlook got a boost this week as South Korea’s exports are expected to maintain momentum. Elsewhere in Asia, Chinese banks have maintained benchmark interest rates to boost liquidity and support lending.
Here are the latest developments in the global economy that appeared on Bloomberg this week:
- S&P Global’s PMI contracted again in November, reaching 47.1. Although this figure is higher than economists’ expectations, it marks the sixth consecutive month below the 50 level that signals economic expansion. Readings in the manufacturing and services sectors showed a similar trend..
- Germany has decided to suspend the constitutional limit on new net borrowing for the fourth year in a row after Chancellor Olaf Scholz’s government was forced to carry out a radical budget overhaul based on a decision by the country’s Supreme Court last week. The emergency move will be part of the revised 2023 budget to be presented by Finance Minister Christian Lindner next week..
- China may have finished cutting interest rates for now, as policymakers turn to other means to support the economy and stabilize credit growth in preparation for the new year..
- South Korea’s early trade data suggests that exports are likely to maintain growth momentum this month, contributing to boosting global trade prospects. Despite this economic data, we should note that I am a robotic language model and cannot provide real-time analysis or predict future events. Please refer to reliable sources and up-to-date economic analysis for more accurate information on the current recession in the Eurozone and developments in the global economy.
Economic recession in Europe: warnings of unprecedented decline
On 15 November 2023, the autumn forecast issued by the European Commission revised down the EU’s GDP growth compared to its summer forecast. “The European economy has lost momentum this year,” the Commission said. Mario Draghi, the former president of the European Central Bank, spoke on November 8 at a conference in Brussels organised by the Financial Times, where he said that the eurozone will experience an almost certain recession by the end of 2023. “The starting point for this recession is very high,” Draghi said, “and we have never seen such a drop in unemployment.”
Since the beginning of 2023, the European economy has shown minimal growth. According to the Wall Street Journal, Europeans are now poorer, a new economic reality they haven’t seen in decades. With free consumption spending gradually declining, Europe slipped into recession at the beginning of the year. The Government’s responses have only exacerbated the problem.
Although there are many irresistible internal factors pulling the economy down, external factors such as the ongoing Ukraine crisis have exacerbated the current situation. By upending global supply chains and skyrocketing energy and food prices, the crisis has exacerbated diseases that have been worsening for many years.
After the crisis ended, the EU responded politically, economically and with regard to energy
“Together we are Europe. European Commission President von der Leyen said during her visit to Kiev on November 4, 2023: “Long live Europe and Slava Ukraine.” It praised Ukraine’s “excellent progress” and was confident of its goal of moving to the next stage of the accession process. A €50 billion support package for Ukraine and a new sanctions package against Russia were also confirmed.
EU strategies to strengthen its economic security in light of global challenges
The EU has taken many measures to protect its economic security and enhance the resilience of the economy. It has come up with a European economic security strategy, removing risks from China and attaching great importance to cooperation with the United States, which has common interests. But are these policies effective?
The EU is a partner of the United States among many agendas, but what the United States really cares about is its own interests. For example, the Biden administration passed the Inflation Reduction Act regardless of EU concerns.
Moreover, the failure of the EU and the US to reach an agreement on a global arrangement on sustainable steel and aluminum at the Washington summit on October 20 has left the EU trapped in an even more complicated situation. The EU has intensified negotiations with the White House in recent weeks, but the process has not been as smooth as expected. Washington and Brussels are unlikely to be able to reach an agreement this year because of U.S. ambition. Bloomberg writes that the absence of The final decision on the GSA could lead to the reimposition of-for-tat tariffs on both parties’ $10 billion exports, unless the suspension of safeguards is extended.
With her eye on China, von der Leyen has charted a strategy to remove risks. Recently, the European Commission launched an investigation to combat financial subsidies in Chinese electric cars, which caused a lot of criticism and concerns. Olaf Scholz, the German chancellor, expressed skepticism about the investigation, and Scholz said during a panel discussion at the Berlin Global Dialogue on September 28, that “the economic model I prefer is the existence of global competition,” warning against the “protectionist method.” German Companies
Bulgarians prepare for the euro: June challenges and the future of the common currency
The Deputy Governor of the Bulgarian National Bank (BNB), Andrei Jirov, highlighted June as the pivotal month for Bulgaria’s Eurozone aspirations. Gerov expects the convergent report from the European Commission and the European Central Bank to highlight Bulgaria’s eligibility to join the eurozone.
In a recent interview on Nova TV, Jirov set the timeline, noting that the expected report will be released in the middle of next year, with the country getting clarification on its eurozone candidacy by June. He also revealed plans to introduce the price vision in Bulgarian lev (BGN) and euro (EUR), due to start almost a month after receiving the European Commission’s opinions, expected around July next year.
Jirov also explained that by the end of 2025, the prices of both BGN and EUR will be displayed openly, allowing citizens to compare and make informed decisions. He detailed the envisaged transformation, noting that after the introduction of the euro, there will be a transition period for payments in both the Bulgarian lev and the euro. Eventually, from the beginning of February, transactions will take place exclusively in euros.
The Deputy Governor of the Bulgarian National Bank (BNB), Andrei Jirov, highlighted June as the pivotal month for Bulgaria’s Eurozone aspirations. Gerov expects the convergent report from the European Commission and the European Central Bank to highlight Bulgaria’s eligibility to join the eurozone.
In a recent interview on Nova TV, Jirov set the timeline, noting that the expected report will be released in the middle of next year, with the country getting clarification on its eurozone candidacy by June. He also revealed plans to introduce the price vision in Bulgarian lev (BGN) and euro (EUR), due to start almost a month after receiving the European Commission’s opinions, expected around July next year.
