Brewing..

 

Concern over inflation in Europe has been brewing even before Russia invaded Ukraine in February. While some argued it was transitory, others warned that it was a sign of a deeper crisis. Now, half a year since the start of the war in Ukraine, a new debate is gripping Europe: is a recession inevitable?

Every passing day seems to foreshadow a downturn. After Moscow decided to temporarily suspend its gas supply to Germany, gas prices surged to €295 per Megawatt-Hour. 

Business activity in Germany and France contracted in August due to falling demand and rising prices. The euro hit a new 20-year low against the dollar, making it more expensive to purchase energy on international markets, which is paid with the greenback. 

The Germany’s central bank, Bundesbank, forecast that inflation, which stands at 7.5%, will hit double digits in fall. And the severe drought sweeping Europe has led to a decline in hydroelectric production when it is needed most. The drought has also led to record-low water levels in rivers such as the Rhine, where some vessels cannot pass, a problem that is causing major disruptions to water freight.

Just a thought.