EU faces economic slowdown; war hurting trade and domestic demand

Humanitarian devastation in Ukraine has disturbed peace across Europe. The borders of Poland, Romania, Hungary and Moldova have also flown. The situation in Europe is dire due to the war pandemic, which has caused more damage to private consumption and investment than pre-coronavirus.

As raw material sources are depleted, and the war has halted the transportation of many goods, manufacturing activity in the European Union has also slowed.  The figures have also come down in the demand for consumption of goods and in the field of apparel business.

War can pose a variety of risks to EU firms: EU firms, especially smaller ones, were vulnerable during the COVID-19 crisis. War will increase the vulnerability of firms through three channels:

• decrease in exports
•  low profits due to high energy prices
• Difficulty in finding funding as banks avoid risk.