Europe is heading for a recession. Christine Lagarde, European Central Bank President, said on Monday that the eurozone's outlook is darkened, and expects business activity to slow down in the coming months due to skyrocketing prices, decreased spending power and the uncertainty caused by the Russia-Ukraine conflict.
The next year will be a difficult year and the first three months of 2023 will most likely be negative as we believe that the fourth quarter of 2022 will be negative as well," he said at a hearing of the European Parliament's Economic and Monetary Affairs Committee.
The Organization for Economic Cooperation and Development lowered its global economic growth forecast for 2023 from 2.8 percent to 2.2 percent, and warned that many European countries could face a recession next year.
An interim report released on Monday said further disruptions to energy supplies would hurt growth and boost inflation, especially in Europe, where they could reduce growth by 1.25 percentage points and raise inflation by 1.5 percentage points, pushing many countries into a recession for the full year 2023. It was particularly gloomy on the economic outlook for Germany as Europe's largest economy is heavily dependent on natural gas supplies from Russia, which have been disrupted due to the Ukraine crisis.
The difficult situation in which many European countries are currently in may give them a chance to reflect on what has led to their current predicament and an adjustment to their self-damaging United States emulating foreign policies.
Trade between China and the EU saw a rise of 27.5 percent year-on-year in 2021, showing vigor and resilience in their economic cooperation despite a weak global recovery because of the negative effects of the COVID-19 pandemic. China remained the EU's largest trading partner and the EU's second-largest trading partner.
The EU, pressured by the US, has taken a much tougher stance on China over the past year, introducing new rules that enforce closer scrutiny of Chinese investments in Europe. It has also imposed sanctions on China citing human rights violations, and declared China a strategic rival. Such hostile policies are already closer to the confrontational policies the US has adopted toward China.
The EU's cooperation with China is negatively impacted by the US's confrontational stance, which is detrimental to the economic interests of its members. The EU should act more independently, rather than allow the US to dictate its policies.