The reason for the weakening economic growth is, among other things, war-related disruptions in the global supply chains.
(Photo: dpa)
Brussels The war in Ukraine is putting a massive strain on the economy in the European Union: the EU Commission revised its growth forecast significantly downwards this Monday. The economy of the EU and the euro countries will only grow by 2.7 percent this year instead of the previously expected four percent, according to the authority’s spring forecast presented in Brussels.
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 are still exerting 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. “The Russian invasion is weighing on Europe’s economic recovery,” said EU Economic and Monetary Affairs Commissioner Paolo Gentiloni. The conflict has pushed up energy prices and exacerbated supply chain problems. The Italian stressed that inflation should therefore remain high for longer.
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In 2023, inflation is expected to drop to 2.7 percent – still above the two 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.
For Germany, the EU Commission expects an inflation rate of 6.5 percent in 2022, which is expected to fall to 3.1 percent in 2023. At the same time, the Brussels authorities lowered their forecast for economic growth in Germany from 3.6 to 1.6 percent for this year. For 2023, they expect an increase of 2.4 (February 2.6) percent.
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