The EU Commission has drastically revised its growth forecast for the European economy downwards because of the war in Ukraine. The economy of the EU and the euro countries will grow by only 2.7 percent this year instead of the previously expected 4 percent, according to the authority’s spring forecast presented in Brussels on Monday. The forecast for inflation in the euro countries in 2022 has almost doubled to 6.1 percent.
The Brussels authorities had already had to adjust their forecasts in their winter forecast in February, among other things because of the high energy prices and the omicron wave of the corona pandemic. The war in Ukraine and above all the persistently high prices for energy and other raw materials continue to exert pressure, as the commission announced. There were also war-related disruptions in the supply chains.
For the coming year, the EU Commission is assuming 2.3 percent growth in the EU and the euro area. In her February forecast, she had predicted 2.8 percent for the EU and 2.7 percent for the euro countries in 2023.
In terms of inflation in the euro area, the forecast for the euro countries has almost doubled this year, from the previously forecast 3.5 to 6.1 percent on an annual average. This is mainly due to the high energy prices, it said. In 2023, inflation is expected to drop to 2.7 – still above the 2 percent target of the European Central Bank (ECB). Before the war began, the commission had assumed an average of 1.7 percent in the coming year.
In the EU as a whole, the Commission is even assuming average inflation of 6.8 percent this year and 3.2 percent next year.