Energy Crisis and Economic Recession in the European Union

Energy Crisis and Economic Recession in the European Union

Europe is currently facing its toughest economic test since the 2008 crisis, but it differs in its nature and causes. The continent is confronting what analysts call a "modified recession," a combination of slower real economic growth compared to previous cycles, consumer price inflation remaining above the European Central Bank's target (2%) for longer than expected, and weak industrial investment that threatens to reduce its competitiveness against both the United States and China.  This new scenario is unlike a classic recession because it involves not only a sharp contraction in GDP for two consecutive quarters, but also a gradual erosion of productivity, a decline in industrial profit margins, and difficulty in restoring export momentum, making recovery more challenging for traditional monetary policies. Manufacturing in Decline: PMI Signals a Prolonged Industrial Contraction Data from the manufacturing Purchasing Managers' Index (PMI) shows a decline for the sixt…