Clouds of uncertainty loom over the EU skies
The EU economy stands on the verge of decline, as it is now entangled with a range of complex and interconnected challenges that have the potential to disrupt its competitive position and threaten growth and physical stability. The economic growth for 2025 is forecasted at 0.9%, putting them significantly behind the USA and China.
Published: 03:03 PM,Mar 30,2025 | EDITED : 07:03 PM,Mar 30,2025
The global landscape is complex and diverse, with varying levels of development across countries. Before the Covid-19 pandemic, the global economy was characterized by a mix of advanced, emerging, and developing economies across different regions, with many European and North American countries among the most economically advanced, but not exclusively so.
The pandemic and the escalating wars in Europe and the Middle East have left an indelible mark and transitioned the global societal and business landscape to a state of flux. Fundamental forces, including technological advancements and disruptions, geopolitical reorientation, economic shifts, demographic changes, and climate change, shape the world we live in today.
The EU economy stands on the verge of decline, as it is now entangled with a range of complex and interconnected challenges that have the potential to disrupt its competitive position and threaten growth and physical stability. The economic growth for 2025 is forecasted at 0.9%, putting them significantly behind the USA and China.
It is also projected that the growth will be around 1.2% in 2026 and 1.3% in 2027. Member states of the EU, such as Spain, Belgium, Portugal, Greece, Italy, and France, face a huge debt that exceeds 100% of their GDP. Such high-level debts pose a threat not only to the countries but to the EU as a whole.
Some of these countries are making progress in reducing their debt. Energy costs and supply chain disruptions are helping to ease inflationary pressures. Low productivity is driving up labor costs, which erodes investment competitiveness on the global stage. Umm
The alarm bells for Europe's situation were faintly heard in 2021, ushered in by the Covid- 19 pandemic's unprecedented disruptions and widespread lockdowns. As the world began to recover and rise from the ashes of the pandemic, the energy crisis was triggered by the Russian invasion of Ukraine in 2022.
The soaring energy prices eroded household purchasing power, and the EU experienced a spike in inflationary pressures. The US central bank adopted a monetary tightening policy, which further slowed economic growth. The slump in trade deepened and affected European export-oriented economies, which were further impacted by the global trade downturn. The protectionist measures implemented by the Trump administration, along with the tariffs on steel and aluminum imports, could also weaken US-EU trade relations.
The recent US security leak has spawned a new set of strategic intelligence security questions and will have profound ramifications for US-EU ties; it will exacerbate existing tensions, raise concerns, and could lead to a paradigm shift in transatlantic cooperation. Although the US White House and the Trump administration downplay the incident, the leak will have a lasting impact on diplomatic, security, and economic partnerships between the United States and its European allies.
The EU economic outlook appears highly uncertain, with indicators pointing to a downside. The geopolitical risks and vulnerabilities on the energy front will harm the EU's highly open economy.
The dramatic ramifications and consequences of frequent climate changes will have a tectonic impact not only on people and habitats but also on the economy.
The European Union plans to ease monetary policy, boost consumption and investment, and stimulate the recovery of the EU economy despite challenges such as persistent inflation in some sectors and uneven growth across member states. The EU also needs to make significant investments in climate and digital transition to stimulate growth and recovery.
The author is an assistant professor at the marketing and management department of the College of Banking and Financial Studies in Muscat.
The pandemic and the escalating wars in Europe and the Middle East have left an indelible mark and transitioned the global societal and business landscape to a state of flux. Fundamental forces, including technological advancements and disruptions, geopolitical reorientation, economic shifts, demographic changes, and climate change, shape the world we live in today.
The EU economy stands on the verge of decline, as it is now entangled with a range of complex and interconnected challenges that have the potential to disrupt its competitive position and threaten growth and physical stability. The economic growth for 2025 is forecasted at 0.9%, putting them significantly behind the USA and China.
It is also projected that the growth will be around 1.2% in 2026 and 1.3% in 2027. Member states of the EU, such as Spain, Belgium, Portugal, Greece, Italy, and France, face a huge debt that exceeds 100% of their GDP. Such high-level debts pose a threat not only to the countries but to the EU as a whole.
Some of these countries are making progress in reducing their debt. Energy costs and supply chain disruptions are helping to ease inflationary pressures. Low productivity is driving up labor costs, which erodes investment competitiveness on the global stage. Umm
The alarm bells for Europe's situation were faintly heard in 2021, ushered in by the Covid- 19 pandemic's unprecedented disruptions and widespread lockdowns. As the world began to recover and rise from the ashes of the pandemic, the energy crisis was triggered by the Russian invasion of Ukraine in 2022.
The soaring energy prices eroded household purchasing power, and the EU experienced a spike in inflationary pressures. The US central bank adopted a monetary tightening policy, which further slowed economic growth. The slump in trade deepened and affected European export-oriented economies, which were further impacted by the global trade downturn. The protectionist measures implemented by the Trump administration, along with the tariffs on steel and aluminum imports, could also weaken US-EU trade relations.
The recent US security leak has spawned a new set of strategic intelligence security questions and will have profound ramifications for US-EU ties; it will exacerbate existing tensions, raise concerns, and could lead to a paradigm shift in transatlantic cooperation. Although the US White House and the Trump administration downplay the incident, the leak will have a lasting impact on diplomatic, security, and economic partnerships between the United States and its European allies.
The EU economic outlook appears highly uncertain, with indicators pointing to a downside. The geopolitical risks and vulnerabilities on the energy front will harm the EU's highly open economy.
The dramatic ramifications and consequences of frequent climate changes will have a tectonic impact not only on people and habitats but also on the economy.
The European Union plans to ease monetary policy, boost consumption and investment, and stimulate the recovery of the EU economy despite challenges such as persistent inflation in some sectors and uneven growth across member states. The EU also needs to make significant investments in climate and digital transition to stimulate growth and recovery.
The author is an assistant professor at the marketing and management department of the College of Banking and Financial Studies in Muscat.