Gas Crisis as a Precursor of European Recession

Abstract

The reasons for the gas crisis in the European Union, which began in 2021, were the instability of renewable energy, the redirection of LNG to the premium Asian market, anti-Russian sanctions, and a decrease in gas imports from Russia. Despite the measures taken by the EU authorities (energy conservation, diversification of gas supplies and energy sources, financial support for the householders and businesses), the gas crisis will worsen in 2023. The gas crisis, superimposed on the mistakes of the monetary policy of the European authorities, accelerates inflation, intensifying structural imbalances in the EU economy and bringing recession closer. The symptoms of a recession can already be observed with the help of key indicators, which include indexes of industrial production and Manufacturing PMI, trade balance, inflation, unemployment rate, retail sales and GDP. The economic downturn in the European Union will negatively affect the dynamics of production in the largest trading partners (China, the US and the UK) and may trigger a recession in the global economy.