The specter of recession threatens Europe – Asia

“We certainly see a big recession taking shape,” said Stefan Hartung, chief executive officer of Bosch engineering and technology group (Germany). CNBC May 6th.

Europe is assessed as particularly vulnerable from the Russia-Ukraine conflict, related economic sanctions, concerns about energy supply, China’s zero-Covid policy, residual influence from As a result, economists have lowered their growth forecasts for the region in recent weeks.

According to Mr. Hartung, at present, consumer demand for many items such as household appliances, power tools, vehicles… is still high, despite price increases and interest rate hikes. But at some point, all will stop, the beginning of a deep economic recession with the pincer both supply crisis and demand crisis.

Inflation in the euro area hit a record 7.5% in March. There has not been a shock rate hike like the Bank of England or the US Federal Reserve (FED) but the European Central Bank (ECB) is expected to end its net asset purchases under the APP – Asset Purchase Program, a part of a package of non-standard monetary policy measures the ECB implemented from October 2014 – at the end of the third quarter, after which monetary tightening can begin.

People in Berlin – Germany rent land to grow their own vegetables to cope with the sharp increase in food prices Photo: REUTERS

An immediate embargo on Russian gas would turn short-term economic risks in Europe into a recession, according to Holger Schmieding, chief economist at investment bank Berenberg (based in Hamburg, Germany). serious recession.

Recession can be prolonged if the US also starts a recession due to the wrong moves of the Fed. The risks to Europe’s position “on the brink” will increase if there is any military escalation in Ukraine or a worsening of the energy crisis, said Mark Branson, chairman of the German Financial Conduct Authority. .

The CEOs of automakers Mercedes-Benz and Volkswagen say they are facing a challenging business environment due to the blockades in China – a large consumer market, chip shortages and conflict in Ukraine.

The latest report on the consumer price index in Tokyo – Japan shows a shocking increase: 1.9%, the highest in the past 7 years.

Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute, analyzed with Reuters that the main cause of inflation lies in the rising cost of food. Energy prices in Tokyo rose 24.6% year-on-year in April despite government efforts to subsidize prices.

Takahide Kiuchi, executive economist at Nomura Research Institute, also forecast a recession, in which consumption is dragged down by a weak yen and rising prices. The Bank of Japan last week raised its inflation forecast to nearly 2% but kept its interest rate target unchanged.

According to Reuters, the Reserve Bank of Australia warned core inflation could now hit 4.6% in December, up to 2 percentage points higher than forecast in February, well beyond the 2%-3 target range. % of RBA.