Slower economic growth: EU inflation forecast almost doubled

Less economic growth
EU inflation forecast almost doubles

Economic prospects in Europe are darkened by the war in Ukraine. The European Commission must considerably improve its growth and inflation forecasts.

The European Commission has drastically lowered its growth forecast for the European economy due to the war in Ukraine. The economy of the EU and eurozone countries will grow only 2.7% this year instead of the previously expected 4%, according to the authority’s spring forecast. Inflation forecasts for eurozone countries in 2022 have almost doubled to 6.1%.

The Brussels authorities had already had to adjust their forecasts in their February winter forecast, among other things due to high energy prices and the omicron wave of the corona pandemic. The war in Ukraine and, above all, the still high prices of energy and other raw materials continue to exert pressure, as announced by the commission. There have also been war-related disruptions to supply chains. For the coming year, the European Commission expects growth of 2.3% in the EU and the euro zone. In its February forecast, it predicted 2.8% for the EU and 2.7% for eurozone countries in 2023.

In terms of inflation in the euro zone, forecasts for euro zone countries have almost doubled this year, rising from 3.5% to 6.1% on annual average. This is mainly due to high energy prices, he said. In 2023, inflation is expected to fall to 2.7%, still above the European Central Bank’s (ECB) target of 2%. Before the start of the war, the commission had assumed an average of 1.7% for the coming year. In the EU as a whole, the Commission is even counting on an average inflation of 6.8% this year and 3.2% next year.

Forecasts for the German economy have also been significantly corrected. The European Commission expects only 1.6% growth for this year, instead of the 3.6% forecast previously. Next year, Europe’s largest economy will grow by 2.4% instead of the previously forecast 2.6%.

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