The fears of global economic recession are beginning to prove true. The fear of recession in America, the world’s largest economy, may have reduced, but the danger does not go away. At least for Europe the recession is going to prove disastrous. The latest situation is clearly indicating this.
Germany has become a victim
Germany, Europe’s largest economy, has officially fallen into recession. Now Britain, Europe’s second largest economy after that, is in danger of falling into recession. Not only this, Eurozone may also fall into recession. If this happens, then this global recession can prove to be a disaster for the economy of Europe.
This is called economic recession
Economic recession is a situation when growth Rates fall, companies start closing one after the other and people get devastated due to unemployment and inflation. According to the official definition, if the growth rate of an economy remains below zero for two consecutive quarters, then it is considered to be in the grip of recession. When the economic growth rate falls below zero i.e. becomes negative, it means that the size of that economy is decreasing. Germany’s economy has witnessed negative growth for two consecutive quarters.
Interest rate hike put on hold
Britain, Europe’s second largest and world’s sixth largest economy, If we do, the pace of layoffs is the highest since the pandemic. According to a Bloomberg report, companies in Britain are currently expelling their employees at the fastest pace since the pandemic. The financial crisis has deepened. This is why the Bank of England, in its policy meeting held this week, decided to stop interest rate hike for the first time in almost 2 years.
Britain’s condition is so bad
Britain S&P Global’s composite PMI for India decreased to 46.8 in the month of September. A month ago this index was at 48.6. This is the biggest fall in Britain’s composite PMI since January 2021. January 2021 was the time of lockdown due to the pandemic. S&P Global says that if the time of the pandemic is considered an exception, then the pace of layoffs in Britain’s job market is the fastest since October 20069. These figures indicate that the condition of Britain’s economy is not good and it may fall into recession in the coming months.
Here is the Eurozone PMI right now
In a report by Reuters, serious alarm bells have been rung for the Eurozone. According to the report, the Eurozone economy may suffer negative growth in this quarter and after that there are no signs of returning to positive territory for a long time. S&P Global’s Eurozone composite PMI was at a 33-month low of 46.7 in August. It improved somewhat to 47.1 in September, but is still below 50. PMI less than 50 shows contraction.
Fear of decline in September quarter
On the other hand, Hamburg Commercial Bank has said in a latest report that the size of the Eurozone economy will contract by the third quarter of 2023. There may be a decline of 0.4 percent during the quarter i.e. July-September. In fact, to control inflation, the ECB has increased interest rates by 4.5 percent in the last few months. Expensive interest rates have put a brake on the progress of the economy. The strong service sector of France, the Eurozone’s largest economy, is continuously declining. In this way, the risk of recession is the highest in the Eurozone.
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