Recession In Europe? Populism, 'Brexit' And 'Frexit' Could Damage EU Economies, Currency, Experts Say

Populist uprisings in the European Union and across the Atlantic could make the bloc's economy suffer, experts say, citing the U.K.'s impending break from the EU, also known as "Brexit," the election of President Donald Trump in the U.S. and the rising popularity of far-right French presidential candidate Marine Le Pen, who has embraced the moniker "Madame Frexit" for her intention to follow the U.K.'s lead.

Worry about the eurozone's future has permeated equities markets, Deutsche Bank AG Chief Investment Officer Christian Nolting told Bloomberg Wednesday.

"People are still cautious — there is still demand for bonds and people are not ready to move into the more risky equity space," he said, adding that most investors held the belief “that there are a lot of risks out there and a lot of uncertainty.”

Anxieties have heightened in relation to the EU's currency and member states' individual economies as well, as many have seen France's increasingly likely withdrawal from the bloc as a factor that would lead to economic chaos.

France's central bank estimates the country would lose 30 billion euros, or $31.8 billion, annually as a result of a so-called "Frexit," the Financial Times reported. While Great Britain's rupture with the bloc would not require any change of currency, European Central Bank executive board member Benoît Cœuré reportedly warned that France's return to the franc would lead to "impoverishment" and would “threaten the jobs and savings of the French people."

Le Pen, who plans to reintroduce the franc, is seen as running neck and neck with the April presidential election's leading contender, Emmanuel Macron, a Monday poll indicated.

"If France, which is the second-largest economy in the region, withdraws, then the eurozone is probably dead," Norman Raschkowan, the president and portfolio manager of Toronto financial planning services company TenSquared Investments, told CNBC Wednesday.

He added nationalist sentiments and tough immigration stances in Poland, Hungary and Turkey, with which the EU suspended talks of extending membership in November, are likely playing a role in their economic declines. And those nations aren't alone in seeing slower growth.

The European Commission, the EU’s main legislative body, projected slowing growth for the bloc in the coming year, down to 1.6 percent in 2017 from 1.7 percent in 2016. The commission cited Brexit and Trump's new administration as factors that “will certainly have consequences for our economy” and represented significant sources of uncertainty, Bloomberg reported Monday.

Germany, the EU's top economy, which saw a 1.9 percent GDP growth rate for the whole of 2016, narrowly missed Bloomberg's estimate for its quarterly gross domestic product growth by 0.1 percentage point Tuesday, with a 0.4 percent rise in the value of its goods and services produced in the final three months of the year. Italy, whose gross domestic product rose 0.9 percent in 2016, saw quarterly growth of 0.2 percent and missed Bloomberg's estimate by 0.1 percentage points as well.

For Italy, the news wasn’t exactly cause for anxiety as the country’s GDP growth hit 0.7 percent in 2015 after turning positive in 2014 following a dip to negative 2.8 percent in 2012.

Germany, however, has long been seen as Europe’s powerhouse, with a GDP of nearly $3.5 trillion — the largest in the European Union and twice that of Italy. Its economy grew at a rate of more than 1.7 percent in 2015 and nearly 1.6 percent in 2014.

Although 2016’s fourth quarter represented a solid pickup from the previous three-month period — thanks in part to an influx of migrants, whose needs for housing gave the construction sector a boost, according to state broadcaster Deutsche Welle — the lower-than-expected quarterly figure fed worries for the European Union’s economic future.