Europe's economy on a knife edge
Apr 14,2022 - Last updated at Apr 14,2022
Europe's economy is finely poised between recession and growth.So far, however, the data show only a mild softening of demand and limited disruptions to supply
They signal nothing remotely resembling the collapse in activity that accompanied 2020-21 pandemic
lockdowns.The OECD's weekly tracker of economic activity, which uses machine learning and Google
Trends data to infer real-time changes, similarly points to only a mild slowdown.In response to the war and energy shock, the European Central Bank, appropriately, has downgraded
its forecast for eurozone growth in 2022 from 4.3 per cent to somewhere in the 2.3 per cent to 3.7 per
cent range, depending on what happens to oil and gas prices.Before Russian President Vladimir Putin's attack on Ukraine, Europe's recovery from the damage
wrought by the COVID-19 pandemic was solidifying.Economic sentiment improved in the first half of February, surpassing pre-pandemic
levels.But then the war dented consumer contidence by heightening uncertainty and raising energy
and commodity prices.In mid-March, the European Commission's consumer confidence indicator fell
to its lowest level since the start of the pandemic.Industrial production rose in January and retail
trade rebounded.Data from the navigation service TomTom do not suggest
much decline in mobility-related activity.The knife edge is sharp because
European policymakers have exactly zero control over the outcome.Box office receipts
are stable.Restaurant receipts are stable.Copyright: Project
Syndicate, 2022.