OUR Energy crisis in Europe and his excommunication from Russian hydrocarbons did not ultimately become Armageddon for economy because everything shows that the eurozone has avoided recession, at least for now. First, in the last quarter of last year, the eurozone experienced slight growth, and at the end of January Eurostat announced GDP growth of 0.1%. At the time, Bert Collins, an economist at ING, marveled at the “amazing resilience” the company had shown during the energy crisis. This marginal growth for the year as a whole means GDP growth of 3.5%, and John Leaper, chief executive of Titan Asset Management, called it an “achievement.” And all this when the ECB raised interest rates on the euro by 2.5 percentage points in the second half of last year.

That’s all IMF now predicts that in 2023 Eurozone it will record growth by 0.7%, i.е. higher than forecasted in October 0.5%. And the reason for the improved forecasts is, among other things, the de-escalation of natural gas prices, as well as the assistance offered by European governments to protect European households from energy uncertainty. More restrained but still optimistic, Deutsche Bank joined the optimists this week in revising its forecasts for the eurozone upwards, now believing its GDP to grow by 0.5%. Looking ahead to next year, the German giant is forecasting 1% growth. Its analysts say the eurozone is avoiding a recession this year as the energy crisis deescalates because the uncertainty caused primarily by the war is receding and the sharp blow to real incomes is limited.

Given that inflation in the euro area tends to slow down, the ECB president acknowledged that “the recent picture is not as bad as we thought a few months ago.” Deutsche Bank still predicts that the restart of the Chinese economy will strengthen eurozone GDP by 0.2 percentage points, while optimistic that by the middle of next year, the ECB will be able to bring eurozone inflation closer to its target of 2%. Therefore, he is optimistic that the Eurozone Bank will then be able to launch a new round of interest rate cuts, cutting by 25 basis points each quarter, to eventually bring them back to 1.75%.

Of course, not all the clouds over the eurozone have cleared, as Germany announced a few days ago that its economy contracted in the fourth quarter of 2022, meaning that it risks sliding into recession. However, according to the ZEW Economic Institute Index, the picture remains mixed at worst as investment confidence in Germany returned to positive levels. Almost simultaneously, however, France and Spain announced that they had registered a new acceleration in inflation after their recorded deceleration trends.