The EU Commission is now predicting inflation of 7.6 percent. The economy will grow more slowly than recently expected.
According to the EU Commission, the consequences of the Russian attack on Ukraine are driving the inflation rate to a record level and slowing down the economic recovery. According to its summer forecast presented in Brussels, the authority expects an inflation rate of 7.6 percent in the euro zone for 2022. It thus corrected its estimate from May by 1.5 percentage points upwards. This also happened against the background that the inflation rate had reached a new high of 8.6 percent in June.
“Shockwaves” for the global economy
Economic growth in Europe is also suffering from the consequences of the Ukraine war. The EU Commission is now anticipating an increase in gross domestic product of 2.6 percent for the current year. For 2023, she predicts only low economic growth of 1.4 percent for the countries of the euro zone.
EU Economic and Monetary Affairs Commissioner Paolo Gentiloni sees the consequences of the Ukraine war as the main reason for the development. “Russia’s senseless invasion of Ukraine continues to send shockwaves through the global economy.” This would upset energy and grain supplies. As a result, prices rose and confidence suffered. In Europe, the ramp-up of the economy after the corona pandemic boosted growth. But despite a promising start to the holiday season in summer, economic activity is only expected to be subdued in the second half of the year.
EU economy in Putin’s hands
In its forecast, the EU concedes that Russian President Vladimir Putin has the power to disrupt the EU economy in the coming months. The forecasts of economic activity and inflation depend on the development of the war in Ukraine “and in particular its consequences for Europe’s gas supplies,” it said in a statement. But the corona pandemic, which has not yet been overcome, could also cause a further downturn.
For Germany, the EU Commission expects an inflation rate of 7.9 percent in 2022 and 4.8 percent in 2023. At the same time, she lowered her forecast for economic growth to 1.4 percent for this year. For 2023, she expects the German gross domestic product to increase by 1.3 percent.