Recession Coming to West

By Staff, Agencies

Fitch Ratings told Bloomberg that Germany and Italy will slide into recession by the end of the year as inflation continues to rise.

Although the downturn is not expected to be “severe,” the head of sovereigns and supranational at Fitch, James McCormack, says that “recession is significant in and of itself.”

The German economy shrank by 0.4% quarter-on-quarter in the final three months of 2022. The contraction came in larger than the previously estimated 0.2% GDP drop.

In Italy, the EU’s third largest economy, consumer prices rose 9.2% in February compared with the same period last year, down from a 10% increase in January, preliminary data from the country’s statistics agency ISTAT showed on Thursday.

Purchasing power in the country more than halved over the past year, according to a report by Nomisma think tank, which said that one in seven Italians complained they earned less than they required to make ends meet. A quarter of those surveyed said they spent all their money on essentials while 26% of Italian households said they feared not making it to the end of the month.

The US is also at risk of a “modest” recession by the end of the year, McCormack told Bloomberg, adding that the “UK is already probably there.”