BRUSSELS: The European Commission has slashed its yearly growth expectations for both the European Union (EU) and the eurozone this year due to the Russia-Ukraine crisis.
According to reports, the Commission's Spring 2022 Economic Forecast, real GDP growth in both the EU and the eurozone is now expected to be 2.7 percent in 2022 and 2.3 percent in 2023, down from its February forecast of 4.0 percent in 2022 and 2.8 percent (2.7 percent in the eurozone) in 2023.
It also raised its inflation projection for the eurozone to 6.1% in 2022, citing continued strong price increases across the board. The EU's overall inflation rate is predicted to hit 6.8% this year.
Due to higher commodity costs, notably energy, which have climbed further since the Russia-Ukraine crisis broke out on February 24, European Commissioner for Economy Paolo Gentiloni termed the decrease in predicted growth as "one of the steepest" ever done.
"High inflation, uncertainty, and exacerbated supply bottlenecks are projected to harm both private consumption and investment. Consumption, on the other hand, should continue to benefit from the post-pandemic recovery momentum, a strong labour market, lesser savings accumulation, and fiscal measures to counteract rising energy costs "At a press conference, Gentiloni stated.
Since early 2021, he claims, inflation has been increasing. In the eurozone, it reached 7.5 percent in April, "the highest percentage in our monetary union's history."