Business & Economy

EU cuts growth forecasts amid energy crisis due to Ukraine war

Brussels, May 16 (EFE).- The European Commission on Monday cut its 2022 growth forecasts for the eurozone from 4% projected in February to 2.7% due to the impact of the Russian war in Ukraine.

The EC also estimates that average inflation this year will reach 6.1%.

Growth forecasts for the whole of the EU have also been cut by 1.3% to 2.7%, with inflation at 6.8%, according to the Commission’s Spring forecasts.

For the 2023 financial year, Brussels forecasts that GDP growth will be 2.3% in both the eurozone and the rest of the EU, and that inflation will moderate to 2.3% and 3.2%, respectively.

Brussels defended the downward revision due to the “new challenges” caused by Russia’s invasion of Ukraine, which has dented hopes of a “prolonged and robust expansion”.

“By exerting further upward pressures on commodity prices, causing renewed supply disruptions and increasing uncertainty, the war is exacerbating pre-existing headwinds to growth, which were previously expected to subside,” the Commission said in its report.

In a statement, economy commissioner Paolo Gentiloni said: “Russia’s unprovoked invasion of Ukraine is causing untold suffering and destruction, but is also weighing on Europe’s economic recovery.”

“The war has clearly exacerbated the headwinds that were previously expected to gradually fade,” he said, including “the sharp rise in commodity prices and the aggravation of existing supply-side disruptions, as well as the emergence of new ones, for instance in transport and logistics.”

The forecasts predict that inflation will “peak at 6.9% in the second quarter of this year and decline gradually thereafter”.

The European Commission warned that the “risks” to the European economy are “heavily dependent on the evolution of the war, and especially on its impact on energy markets.” EFE


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