The European Central Bank Governing Council revealed on Thursday that the euro area's economic activity is likely to contract significantly in the third quarter of 2022, projecting "further weakening" of the economy well into 2023 as skyrocketing prices continue to put pressure on spending and production across the region.
Disruptions of gas supply to the euro area have crashed consumer and business confidence as geopolitical uncertainty and unfavorable economic conditions rattled through the region. Deteriorating trading terms, primarily led by higher growth of import prices in comparison to those received for exports, have a negative impact on income across the region, according to the report.
The European Central Bank warned in its Economic Bulletin that inflation is expected to stay elevated for an extended period, adding that the labor market could face a higher unemployment rate in the future despite showing resilience to the current economic trend.
