The CEOs of several European blue chip companies have told CNBC that they see a significant recession coming down the pike in Europe.
The euro zone is vulnerable to the effects of the Russia-Ukraine war, economic sanctions and energy supply concerns, and economists have been downgrading growth forecasts in recent weeks.
The euro zone is facing economic shocks from the war in Ukraine and a surge in food and energy prices, as well as a supply shock from China's zero- Covid policy. Concerns have been raised about an environment of low economic growth and high inflation.
For sure, we see a big recession in the making, but that is exactly what we see. The CEO of Bosch said that there is still an overhanging demand because of the Covid crisis.
In a lot of areas in the world, the demand of consumers has already been increased.
Hartung suggested that consumer demand for household appliances, power tools and vehicles would diminish.
For a certain amount of time, this demand will still be there, even while we see the interest increase and the pricing increase, but at some point in time, it will also be a supply crisis.
Inflation in the euro zone hit a record high in March. The Bank of England and the U.S. Federal Reserve have begun hiking interest rates in a bid to rein in inflation.
The European Central Bank expects to conclude net asset purchases under its APP program in the third quarter, after which it will have room to begin monetary tightening.
Berenberg Chief Economist Holger Schmieding said in a note Friday that the risks to economic growth are tilted to the downside in Europe.
Schmieding said that a temporary contraction in Eurozone GDP in Q2 could be caused by high energy and food prices.
An immediate embargo on gas imports from Russia could turn that into a more serious recession. If the Fed gets it wrong, the U.S. could be in a recession well into next year.
If worse came to worst, Schmieding suggested that the euro zone would likely enter a recession.
The president of the German financial regulator said that any military escalation in Ukraine or further energy supply disruption could pose serious risks to growth in Europe's largest economy.
We are already seeing that growth is down to zero in many places, and it is vulnerable. He said that it is also vulnerable from the ongoing Covid-related shocks.
Inflation is going to need to be tackled, so that is difficult for the economy.
Slawomir Krupa told CNBC that the French lender is watching the macroeconomic picture closely.
The triggered inflation feedback loop between the energy shock and the war in Ukraine is a fundamental piece of news for the macroeconomic context.
The CEO of Mercedes-Benz told CNBC last week that the situation in China and the Ukraine war are making for a challenging business environment.
On the other hand, we have ongoing shortages associated with semiconductors. The business environment is challenging because of the new lockdowns in China, the biggest market in the world, as well as the Ukraine war, which can affect supply chains across the world.
Herbert Diess, the CEO of Volkswagen, told CNBC on Thursday that the company faced a challenging environment from Covid, the chip shortage and the war in Ukraine in the first quarter.
Maersk CEO Soren Skou said Thursday that the world's largest shipping company is keeping an eye on recession risks, particularly in the United States, but does not expect those to come to the fore until late 2022.
All Rights Reserved © 2024
