The latest European economic trends, cross-border sellers must know!

Time: 2023-04-21 10:04

Since the Credit Suisse collapse, expectations for the European economy have generally been poor.
But the latest data suggest that Europe's economy is steady and rising.
IAN Consults with the latest economic trends in Europe for overseas companies.

First, European GDP is generally stable and will experience a small increase.
European GDP has generally been stable recently. Looking ahead, Europe is poised for modest GDP growth for four reasons.
1. High energy prices in 2022 were driving almost all economic activity in Europe, when the risk of a deep and prolonged downturn in energy-related economic activity was high. Today, energy prices are down. Since the beginning of 2023, Europe has become less pessimistic and more confident about the economy.
2. The EU has made a series of important breakthroughs in promoting green energy transformation, greatly reducing its dependence on Russia. As a result, the price of imported energy has fallen significantly. At the same time, as a result of the energy transition, some new investment opportunities may open up in Europe, which will contribute to the growth of the European economy in the future.
3. The expectation of inflation has been improved, which means that European citizens are less worried about future price rises. The pressure of inflation on consumption is not as strong as before, and residents are more optimistic when making consumption decisions. A good consumer mentality can boost economic growth.
4. Supply chains begin to shift from China to other places, and Europe may also get new investment opportunities, which may stimulate the growth of domestic demand in Europe, thus contributing to economic development.

Second, the overall inflation in Europe is steadily declining and the trend is optimistic.
Since peaking in October 2022, inflation in Europe has been falling slightly every month. While still historically high, the path to decline is clear.
The main drivers of inflation in Europe are also quietly changing. Energy prices, which peaked in 2022, have continued their steep decline. The main driver of inflation has changed from energy to food prices and service prices.
Looking ahead to the next few months, with supply chain bottlenecks easing in Europe as a whole, high energy prices falling and the euro appreciating slightly, inflation in Europe as a whole will continue to fall steadily. However, it is important to note that European food and service prices are likely to reach new highs in the coming months. Underlying inflation dynamics will remain strong, and it will take a long time for prices to fall. In Europe's five major economies -- Germany, France, Italy, Spain and the Netherlands -- food and service prices are still rising, but overall growth appears to have slowed.

3. What are the subsequent risk points for the European economy? The following factors need to be focused on.
1. Strong wage growth in the European job market is mainly due to the catch-up effect between wage levels and high inflation since 2021. In wage negotiations with companies, employees often demand extra compensation for high inflation. Over time, the higher inflation, the higher wages, and wages in Europe are relatively well matched by higher inflation. In other words, Europe's job market has weathered slower growth and soaring inflation better.
But rising wages will push up the price of labor services in Europe as a whole. The price of services is now the main driver of inflation in Europe. The catch-up effect between higher wages and higher prices is likely to keep pushing up inflation.
2. When China reopens in 2023, its economy may bounce back better than originally expected. That is likely to boost demand in Europe and put upward pressure on commodity prices around the world.

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