According to the economists surveyed, inflation should average around eight percent in 2022. Water shortages exacerbate the cost problem further.
Frankfurt. According to the risk of recession in the euro area Bloomberg Economists surveyed recorded the highest level since November 2020. The focus is the scenario that energy shortages will drive up already unprecedented inflation.
Economists now estimate the probability of economic output contracting in two consecutive quarters at 60 percent. In the previous poll it was 45 percent, before the Russian invasion of Ukraine it was 20 percent. In Germany, an economic recession may already occur in the current quarter due to the burdens caused by the curtailment of Russian gas shipments.
Eight percent inflation
The cost problem for businesses and families has been exacerbated by the drought, which has reduced water levels in many of Europe’s rivers. This makes it difficult to transport bulk goods such as coal. In many places, nuclear power plants have trouble re-entering cooling water.
According to the economists surveyed, inflation should average nearly eight percent in 2022. Economists expect inflation to rise by four percent next year. However, they expect inflation to peak by 2024 European Central Bank– The target will slow down by 2%.
Economists expect another half-percentage point increase in the European Central Bank’s key interest rate for September. At the end of the year, they see a deposit rate of one percent. They expect another rate hike of a quarter of a percentage point for March next year.