Brussels further darkened its economic forecast for Europe on Friday. The Commission predicts a recession at the end of the year, while sharply raising its inflation expectations, due to the energy surge linked to the war in Ukraine.
“The EU, the eurozone and most member countries are expected to plunge into recession in the last quarter of this year,” the Brussels executive predicted in a statement.
Even if he anticipates a return to growth in the spring, he has revised his GDP growth forecast for 2023 down sharply to just 0.3% for countries sharing the single currency, against 1.4% expected so far. .
The EU particularly affected by the war in Ukraine
At issue are the consequences of the Russian invasion of Ukraine, which affected the world economy, but particularly Europe.
“The EU is among the most affected advanced economies, due to its geographical proximity to the war zone and its heavy dependence on gas imports from Russia,” the Commission stressed.
“The energy crisis is eroding household purchasing power and weighing on production. Confidence indicators have fallen sharply,” she explained. As a result, “the expected figures for 2023 are significantly lower for growth, and higher for inflation,” she noted.
Inflation stronger than expected
Brussels has revised its inflation forecast for the euro zone for 2023 sharply up to 6.1%, against only 4% expected so far, but it estimates that the rise in prices will decline after having peaked at the end of 2022. .
Over the whole of 2022, Brussels expects inflation to be stronger than expected at 8.5%, against 7.6% previously expected.
“The uncertainty remains exceptionally high” due to the unpredictable evolution of the war, however, warned the European Commissioner for the Economy, Paolo Gentiloni, during a press conference. “The risk is mainly that of even worse numbers,” he said.