Manufacturing activity in Europe contracted for the 18th consecutive month in December 2023.
The economy of EU countries remained stagnant in the third quarter of the current financial year. Gross domestic product growth in Europe was almost stagnant compared to the previous three months. A recent report suggested that GDP in the euro area shrank by 0.1 percent.
Many German companies are in crisis. Doubts remain about business prospects for the first half of 2024 for many companies
The crisis is directly Germany
As the European Central Bank’s austerity policies hit the economy, European companies are facing a crisis. In particular, real estate, retail and energy industries are in trouble. European property retail giant Cigna has filed for bankruptcy in Austria and Germany. High borrowing costs and falling demand are hurting big companies.
Markus Fugmann, chief analyst at a financial consultancy in Germany, says the bankruptcy of Cigna, which owns shopping malls and the like in several major German cities, could even lead to a decline in Europe’s commercial real estate market.
The warning is that if the debt of real estate companies in Europe increases, there may be a banking crisis in Europe.
Adding fuel to the fire is the Israeli-Palestinian conflict
A recent study by Goldman Sachs points out that the conflict between Israel and Palestine will have a significant impact on inflation and economic growth in Europe. If the conflict persists or escalates, there are fears that Europe could face soaring inflation. There are signs that the chances of the Eurozone going into recession from the third quarter are very high. Economic growth in the euro area is forecast to contract further in 2024. If Europe gets into a severe financial crisis, it will have an impact on other markets as well.