Euro-Area Is Set to Avoid a Significant Winter Downturn

With energy costs dropping, the euro zone is set to escapes two consecutive quarters of contraction by the narrowest of margins, according to Bloomberg Economics’ latest projections. Whether a “technical recession” — two consecutive quarters of contractions — is recorded or not, the key takeaway is that the combination of surprising resilience and a smaller squeeze on real incomes makes a deep downturn in the euro area much less likely. Warm weather and a light-footed response from energy-intensive businesses have loosened Russia’s stranglehold on the euro-area economy — BE no longer forecasts a significant winter downturn.