Chinese economist reveals Europe’s risk of facing another recession.

Europe may be approaching its third recession since the 2008-09 global economic crisis, having a direct impact on the region’s investments and exports in China, Justin Yifu Lin, China’s top economist stated on September 8, 2014. The former chief economist at the World Bank said that the risk cannot be negated currently as the EU still needs to restructure its reforms. 

Europe faces economic recession

Lin is a leading advisor to the Chinese Government and stated his concerns in a speech after he received an honorary doctorate from the Vlerick Business School and the Catholic University of Leuven in Belgium. 

The economist made the observation on the basis of the fact that the eurozone’s real GDP had remained unchanged in the second quarter of this year, in comparison to the previous quarter. Germany and Italy had reported a decline in their GDPs by 0.2 percent in the second quarter, when compared with the first quarter of 2014.

It was only last week that the European Central Bank had cut its interest rate further to forcestart the economy. This led to a fall in the exchange rate of the euro against the yuan (7.95) on September 8, 2014, as compared with 8.68 on May 8, 2014.

Any further depreciation of the euro will lead to an increase in exports from the EU, owing to loose monetary policies. 

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