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Thursday, September 29, 2022

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Eurozone economy would fall 2.2% in 2023

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The German capital bank, Deutsche Bank, reduced its estimates of economic growth in the euro zone, and expect a fall of 2.2% by 2023.

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Meanwhile, inflation would close this year at 8.2% and at 6.2% for 2023, far from the 2% target of the European Central Bank (ECB).

According to Deutsche Bank, energy prices are the main headache for specialists, since they rose 139% annually in July. “In August, producer prices in the industry increased 45.8% annually. That was by far the largest increase since records began in 1949.

Along these lines, Germany would be one of the countries most affected by the inevitable recession, since its GDP would drop 3.5% due to the energy crisis.

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It should be noted that a few days ago the ECB indicated that “economic activity would suffer stronger adverse shocks and would be considerably weaker than in the reference projections, with markedly negative GDP growth for next year. Inflation would be higher especially in the medium term”.

This is due to the uncertainty due to Russia’s war in Ukraine, which implies a total cutoff of Russian gas, as well as maritime oil flows to the euro zone, with little possibility of accessing alternative sources of supply. “It also assumes higher prices for raw materials, greater uncertainty, weaker trade and a deterioration in financing conditions compared to the reference scenario,” is detailed in an ECB analysis.

Euro price falls

The euro sank to $0.98, marking a 20-year low, after the US Federal Reserve (Fed) raised interest rates and announced more very rapid increases.

“After holding levels around parity for the past month, the euro finally sank under the weight of rising US rates,” Monex Europe analysts commented.

The data

Exchange rate. The price of the dollar closed down last Thursday and stood at S / 3.8840. Thus, the US currency fell 0.66% compared to the day before.

Source: Larepublica

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