European economies are likely to undergo a new crisis soon, whose scale cannot be predicted accurately at present. However, an inevitable decline is part of the cyclical nature of economic development; the question is when it will happen and how prepared will be the countries to meet future shocks.
This is the opinion shared by experts who are already seeing the first signs of entry into the dangerous period.
Paneuropean Index Stoxx 600, which reaches a 22-month low at present, lost 12 percent of its peak in January. The shares of 290 out of 600 companies, part of the Index, have lost at least 20 percent of their value from their peak levels during the last 52 weeks.
Two sectors are making impression with their figures: the automotive and banking. They have lost 28 and 25 percent respectively. Some serious concerns are also caused by the situation on the real estate market in most countries in Europe. The rents in Spain after the crisis are booming and this leads to the belief that a new balloon will burst. According to Eurostat data for 2016, 43 percent of Spanish people have spent 40 percent of their income for rent, while the average percent in other EU countries is around 28.
Earlier this week, the German government has significantly reduced the forecasts of economic growth for this and the next year. The main reason for that is the international context that is less favourable despite stable domestic demand. The GDP of Europe’s biggest economy is expected to grow by 1.8 percent in 2018. This is a significant slowdown in growth rates from last year (2.2 percent).
Great Britain is heading to its worst year in economic terms since the last decade. All because the rising “Brexit without deal” concerns. The unsuccessful negotiations will damage significantly the British economy, which hardly managed to rank as second in EU for 2017.
Already over 3,000 companies in Turkey have applied to the court for rescheduling the debts. It is likely that their number will increase to 7000 by the end of the year. Recently, a number of companies from different sectors of the economy and from different parts of the country have announced insolvency. They are also trademarks which are important for the Turkish economy – for example, the largest chicken producer in Turkey or a huge retailers with hundreds of subsidiaries.
The high indebtedness of countries such as Greece and the growing danger of Italy to take the same path should not be underestimated.
