by Jan Strupczewski
BRUSSELS (Reuters) – The consequences of the war in Ukraine, including soaring energy prices, will dampen economic growth in the euro zone this year and in 2023, while pushing inflation to a historic high, shows the European Commission’s forecast published on Monday.
The European executive now expects 2022 growth of 2.7% in the gross domestic product (GDP) of the 19 countries that have adopted the single currency, against 4.0% forecast in February, shortly before the invasion of Ukraine by Russia.
For 2023, it lowered its growth forecast to 2.3% against 2.7% previously.
“Before the start of the war, the prospects for the economy of the European Union were one of sustained and solid expansion. But the invasion of Ukraine by Russia has raised new challenges, just as the EU had recovered from the economic repercussions of the pandemic,” the Commission said in a statement.
“By putting further upward pressure on commodity prices, causing further disruptions in supply chains and increasing uncertainty, the war is accentuating pre-existing headwinds to growth,” he said. -she adds.
Inflation is expected to reach 6.1% this year according to the Commission, well above the European Central Bank’s (ECB) target of 2.0% and much higher than its previous estimate of 3. 5%.
Despite public spending to cushion soaring energy prices and support millions of refugees from Ukraine, the EU-wide public finance deficit is expected to shrink to 3.6% of GDP this year, compared to 4.7% in 2021, with the withdrawal of support measures linked to the COVID-19 crisis.
It should reach 2.5% in 2023.
In the euro zone, the deficit should be halved this year compared to 2021, to 3.7% of GDP, and fall further next year, to 2.5%, while the public debt ratio is falling. would stand at 94.7% of GDP, against 97.4% in 2021, then at 92.7% in 2023.
Despite the slowdown in economic growth, unemployment for the euro area as a whole is expected to continue to fall to 7.3% this year and 7.0% in 2023, after 7.7% in 2021.
(Report Jan Strupczewski, French version Laetitia Volga, edited by Kate Entringer)
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