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A recession in the eurozone is very likely in the near future. Economists polled by Bloomberg news agency say so.
They now estimate the probability of an economic contraction in two consecutive quarters, defining a technical recession at 80 percent in the next twelve months. In a previous poll, that was still a 60 percent chance.
The euro area economy is experiencing headwinds from high inflation. It is possible that the economy of Germany, the largest in Europe, will contract as early as this quarter. Germany is very dependent on Russian gas and, therefore, very sensitive to the energy crisis.
Russia has shut down gas supplies to Germany via the important Nord Stream 1 pipeline, saying it has technical problems. Berlin says Moscow is using energy as a means of blackmailing Western aid to Ukraine.
The European Central Bank (ECB) recently reported that the eurozone economy could stagnate later this year and into the first quarter of next year. Therefore, to tackle high inflation, the ECB is raising interest rates.
The last meeting involved an increase of three-quarters of a percentage point. Moreover, more than half of the economists surveyed by Bloomberg expect an interest rate hike of another three-quarter of a percentage point for October.
