DAccording to estimates by the EU Commission, the war in Ukraine will cause growth in the EU to be considerably weaker than previously expected, especially in the coming year. In its summer forecast for the euro area published on Thursday, the EU authority still expects growth of 2.6 percent this year, but only 1.4 percent in 2023. In May it had still expected 2.7 and 2.3 percent .
The Commission – which had seen inflation peak two months ago – once again raised its inflation expectations. For the current year, she now expects 7.6 percent (May: 6.1 percent), for 2023 still 4.0 percent (May: 2.3 percent).
Unusually significant forecast correction
The forecast for Germany is particularly striking. For 2022, the Commission expects the lowest growth in the euro area at 1.4 percent. In 2023, too, the growth rate of 1.3 percent will remain below the average for the euro zone (1.4 percent). Inflation will remain above the euro area average at 7.9 (2022) and 4.8 (2023) percent.
The Commission justified its unusually clear forecast correction with the fact that all economic consequences of the war in Ukraine, which were still classified as risks in May, have now become reality. This applies in particular to the EU’s dependence on Russian energy. The authority justified the renewed correction of the inflation forecast with the further rising energy prices.
Commission Vice-President Valdis Dombrovskis, responsible for economic affairs, warned that the EU urgently needs to reduce its dependence on fossil fuels from Russia. Economy Commissioner Paolo Gentiloni said inflation was now expected to peak later in the year.
