Recession and corporate bankruptcies are set

Europe’s debt crisis can be avoided

They predict over BGN 2.10 per dollar

Stopping the gas will make the situation worse

Europe is facing a recession, the risk of company bankruptcies is growing, and the euro against the dollar may fall further, according to a Bloomberg survey. During a recession, there is a decline in economic activity and a rise in unemployment.

Only 16% of 792 experts polled in the Bloomberg survey believe that Europe will be able to avoid an economic downturn in the next six months. At the same time, 69% predict that the euro is more likely to depreciate to $0.9 per euro than to recover to a level of $1.1 per euro.

If the euro depreciates to $0.9, the leva rate will drop to BGN 2.17 per dollar. And this will raise the prices of imported goods, which are negotiated in dollars. On Monday, the dollar was exchanged for BGN 1.94.

41% of respondents, among whom are portfolio managers and retailers, believe that a debt crisis will occur in the next six months. All this puts the ECB in a difficult position. The bank is expected to raise interest rates this week. This is combined with the aggravation of the energy crisis, after the restriction of gas supplies from Russia and the record high inflation.

“I think recession expectations have risen because of the possibility of curbing gas consumption. If that happens, a lot of companies will go bankrupt,” said Craig Inches, of investment management company Royal London Asset Management.

59% of respondents believe that no debt crisis is expected in the Eurozone in the next six months. But most of those asked indicated that the suspension of gas supplies would be the reason for the worsening of the forecasts. Investor confidence in the German economy has hit its lowest level since 2011. It came after Deutsche Bank forecast that Europe’s biggest economy would contract by 1% in 2023.

Whatever is to come, however, the decline in the euro will continue. Nomura Holdings, UBS Group AG and BCA Research predict a fall to $0.90 per euro by early winter as a worst-case scenario.

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