Since the beginning of this year, the economic recovery in the eurozone has been sluggish. After zero growth in the first quarter of this year, the quarter on quarter growth rate in the second quarter has increased by 0.3%. Professional institutions generally predict that the prospects for economic growth in the eurozone are poor. With the arrival of winter, the pressure of energy supply shortage in Europe will once again become prominent, which may make the prospects for economic growth even more bleak.
On the 24th, Dutch International Group released a report stating that the eurozone economy is still generally in a state of stagnation, increasing the risk of a technical recession. The report points out that the Eurozone October Composite Purchasing Managers' Index (PMI) released by S&P Global on the same day decreased to 46.5 from 47.2 in September, significantly lower than the 50 mark of prosperity and decline, indicating an accelerated decline in economic activity. Among them, the manufacturing PMI remains at 43.1, indicating that the manufacturing industry continues to shrink; The PMI of the service industry decreased from 48.7 to 47.8, indicating a general weakening of commercial activity.
On September 11th, customers were shopping at a supermarket in Mechelen, Belgium. (Photographed by Xinhua News Agency reporter Zheng Huansong)
Bert Klein, senior economist for the Eurozone at Dutch International Group, said that with layoffs in the manufacturing and service industries, job growth has been slow in recent months. The October PMI data showed that at the beginning of the fourth quarter, overall employment was shrinking, and employment in the service industry also stagnated.
ECB President Lagarde previously admitted that the eurozone is currently experiencing "difficult times". The European Central Bank has lowered the Eurozone's economic growth forecast for 2023 to 0.7%.
At present, European countries are about to enter the second winter of lacking Russian natural gas supply. After the outbreak of the Ukrainian crisis, the European Union reduced its natural gas imports to Russia, triggering an energy crisis. In August 2022, the natural gas price in the European market reached 294 euros per megawatt hour, and the electricity price reached 474 euros per megawatt hour.
This is a photo taken on September 14, 2022 in Lubmin, Germany, of the facilities related to the "Beixi 1" natural gas pipeline. (Photographed by Xinhua News Agency reporter Ren Pengfei)
To replace Russia's natural gas supply, EU countries have increased imports from other supply countries while reducing natural gas usage. Norway has replaced Russia as the largest pipeline natural gas supplier to the European Union. EU countries have also significantly increased their imports of liquefied natural gas, with the United States ranking first in terms of supply.
The report released by the European Commission on the same day shows that the European energy market remains fragile. Energy analysts say that although natural gas prices are unlikely to return to last year's record high, the global natural gas market is exceptionally tight in supply, and natural gas prices may still rise due to cold weather or tight supply this winter.
The European Commission has warned that the pace of developing renewable energy in EU countries is still not fast enough. The EU's goal is to achieve 42.5% of renewable energy by 2030, almost twice the current level.
The tight energy supply is the main driving factor behind the high inflation in Europe this round. Although the current inflation rate in the eurozone has decreased from its peak in October last year, preliminary statistical data released by the European Bureau of Statistics at the end of September showed that the inflation rate in the eurozone in September was calculated at an annual rate of 4.3%, which is still significantly higher than the 2% inflation target. The future energy supply situation will inevitably affect the inflation trend and bring uncertainty to the economic outlook.