Eurozone Could Slip Into Recession if Dual Shocks Hit Simultaneously, ESM Warns on Monday

According to the European Stability Mechanism, the eurozone could face recession if a severe geopolitical shock and a sharp global asset price decline occur simultaneously, the fund warned in its annual risk assessment released on Monday. ESM Chief Economist Rolf Strauch noted that while a single shock would be highly challenging, a dual impact could push the eurozone into recession, with inflation approaching 5% and driving most member states' public debt back onto an upward trajectory, assuming no monetary or fiscal policy adjustments.
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