The economic crisis in Europe carries risks for Russia that could negatively affect the lives of Russians. Independent expert and economist Konstantin Tserazov told socialbites.ca about this.
According to him, the rapid rise of interest rates in the Eurozone creates the threat of a slowdown in economic growth and the development of a debt crisis. Additionally, the European Central Bank’s interest rate hike in record time makes adaptation difficult.
The expert notes that the sale of bonds has led to a sharp increase in interest rates for European countries and companies. “This has a negative impact on banks reducing lending and therefore on economic activity. At the same time, the debt burden in the region is now much higher than 10 years ago,” explains Tserazov.
At the same time, inflation in the Eurozone is falling faster than expected and there are signs of stabilization in industrial production. According to Tserazov, a full-scale collapse can still be prevented. Most likely, the decline will slow down at the end of 2023 – the beginning of 2024, followed by a gradual acceleration of growth.
“But a lot will probably depend on other dynamics of energy prices rising again after a fairly long period of stability. This factor is negative for the European economy, because it reduces the competitiveness of enterprises,” Tserazov said.
However, the economist warns that a sharp deterioration of the situation in Europe could also affect the Russian economy. First, this will lead to a decrease in global demand and prices for energy resources. Second, the Chinese economy, which is heavily dependent on the European market, will suffer.
“By the end of 2022, the bilateral trade volume between them reached a record 857 billion euros, the EU has become the largest export market for China, and China has become the third market for the EU after the USA and the UK. Therefore, serious economic problems in Europe will become a painful factor for China and may trigger a decrease in exports and industrial production in the country. This will mean the risk of a decrease in demand for Russian oil and gas from the Middle Kingdom,” summarizes the expert.
This scenario will create risks of reduced foreign exchange inflows to Russia, weakening of the ruble and increased inflation.
ECB president in early October criticized Europe’s economic model.
Previously German Economic Model accused is obsolete.