The eurozone’s recovery from the pandemic crisis will be weaker than expected, while inflation will run faster due to Russia’s war in Ukraine, according to the European Commission’s draft forecast.
With rising prices shrinking demand and the risk of winter energy shortages eroding confidence, gross domestic product in the euro zone is expected to rise 2.6% this year and 1.4% in 2023 – a softer pace than the one predicted in May, for a rise of 2.7% and 2.3% respectively, according to the Commission’s new forecasts cited by Bloomberg.
Inflation, already at record levels, is four times the European Central Bank’s 2% target, and is now expected to reach 7.6% in 2022 and 4% next year, up from 6.1% and 2.7% previously estimated by the European Commission.
Forecasts, as Bloomberg points out, may change before they are officially released on Thursday.
While economic expansion is still seen in the 19-nation currency bloc, the worsening outlook does little to allay fears of an imminent recession, particularly as the Kremlin cuts natural gas supplies in retaliation for sanctions imposed by Europe.
Source: Capital
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