Economic growth? Not so fast

Author: Marek Szymański
Europe will still have to wait for the first signs of tangible economic growth

Europe will still have to wait for the first signs of tangible economic growth. EU forecasts and PMIs leave no illusions. The European Commission has just revised its forecast for economic growth in 2023.

According to the Commission’s experts, growth in the EU economy will be 0.8 per cent, instead of the 1 per cent planned back in May. Interestingly, economists believe that the economy in the euro area, usually growing faster and less prone to inflation, will also end the current year at a similar level. Also diving downwards after the last quarter is the PMI logistics managers’ index, which fell below 50 points in the largest economies (Germany and France). In the language of economics, this means a decline in economic activity.

But some experts believe that the pandemic, the outbreak of war in Ukraine and the gigantic energy crisis in Europe could have caused a real economic cataclysm, and this did not happen. – Last winter, the EU avoided a recession – no mean feat given the scale of the shocks we faced. This resilience, most evident in the labour market, is a testament to the effectiveness of our collective policy response. However, the numerous adversities faced by our economies this year have led to weaker growth than we anticipated in the spring, explains EU Commissioner for Economic Affairs Paolo Gentiloni. Economic growth is projected at 1.4% in 2024 instead of the forecast 1.7%, according to a European Commission report.

However, economists are more worried about the decline in optimism among supply chain managers. The PMI is an abbreviation for the Purchasing Managers Index, which indicates the purchasing activity of managers in many sectors of the economy. The joint PMI for manufacturing and services stood at 46.5 points in October, the lowest in 35 months. – In the eurozone, things have gone from bad to worse. Industry has been in crisis for 16 months and services for three, with both major PMIs falling again. This all points to another bland quarter – comments dr Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank