Determinants of European Economic Development: From Pandemic to War and Sanctions

Abstract

Goal – to analyze the influence of the main determinants in the development of the European economy at the beginning of the 3rd decade of the 21st century. Research methodology – the article includes both an analysis of the ideas and views on economic processes of the world’s leading theorists and practitioners of economic science, and confirmation of the conclusions made on the basis of data from international organizations and institutions (Eurostat, ECB, IMF, FRS, etc.). Score/results – the coronavirus lockdowns are highlighted as the first determinant. The second determinant was specially created by the authorities of the EU countries and provided a unique financial stimulus for the economy in order to prevent a chain reaction of demand contraction. The third determinant was expressed in the acceleration of inflation. Its consequence was, to a large extent, the turmoil in the banking sector. Russia-Ukraine war and the sanctions that followed have added to the uncertainty. These four determinants have accelerated the change in business cycle phases and changed some of their typical characteristics. As a result, the authorities are forced to find a balance between curbing inflation and preventing recessions with the help of very fine regulation. Originality/value – the article represents one of the attempts to look at the ongoing processes through the prism of economic theory in order to form the basis for further actions.