Eurozone to avoid recession this year, as economists' expectations improve

Last month, analysts surveyed by Consensus Economics predicted the bloc would sink into recession this year. This month's survey, however, revealed that they now expect eurozones to register a 0.1 percent increase during 2023. This is thanks to lower energy prices, government support and faster reopening than was anticipated of the Chinese economy, which will affect the growth of global demand.

This improvement comes as business officials and leaders at this year's World Economic Forum in Davos also accepted the possibility of a more optimistic perspective, and the IMF signalled that it will soon improve its forecasts for global growth.

Economists feared Europe would be among the worst-hit areas of the global economy this year, due to its exposure to the economic consequences of Russia's war with Ukraine. Just a few weeks ago, IMF Director Kristalina Georgieva said that the European Union's <x0-second half will be in recession” through 2023.

Karsten Brzeski, head of macroeconomic studies at ING Bank, described the change in economists' forecasts as “a recession that never came to”.

Susannah Streeter, analyst at Hargreaves Lansdownn, said: “The threat of the frightening energy crisis is fading and inflation is dropping faster than expected. ”

Our perceptions have changed radically since October,” said Andrew Kenningham, Europe's chief economist at Capital Economics, adding that government support has been more generous than expected. On the other hand, the automobile sector has recovered more powerful than anticipated.

There is now less than 30 percent risk of a recession, up from 90 percent estimated last summer, according to UBS economist Anna Titareva. She said relief of disruptions in supply chains, the strong labour market and surplus savings are reasons for explaining the eurozone's economic sustainability. Also, Europe has been successful in its efforts to fill gas deposits in recent months, which has greatly reduced fears of gas rationing.

The recent drop in gas prices in abundance, bringing them back to levels ahead of Ukraine's Russian occupation, has also helped improve the economic perspective. JPMorgan increased Eurozone GDP projections for 2023 to 0.5 percent after predicting that natural gas prices would be around 76 euros per megat hours, instead of prior expectations of 155 euros per megat hours. Financial Times