The eurozone and most EU countries will head to an economic recession in the last quarter of 2022, according to the European Commission’s autumn economic forecast.
The economic situation has deteriorated markedly and we are heading into two quarters of contraction,” said EU economy commissioner Paolo Gentiloni at a press conference.
The EU’s executive revised up its inflation forecast from July, predicting that prices would peak towards the end of this year and remain high in 2023. Inflation will average 9.3% in the EU and 8.5% in the eurozone for 2022, Brussels said.
The EU is among the most exposed advanced economies (to high prices), due to its geographical proximity to the war and heavy reliance on gas imports from Russia,” the European Commission said in a statement.
“The energy crisis is eroding households’ purchasing power and weighing on production.”
While prices are expected to come down in 2023, inflation is still predicted to be at 7% in the EU and 6.1% in the eurozone, before decreasing to 3% in the EU and 2.6% in the euro area in 2024.
The EU forecast was based on the assumption that geopolitical tensions such as the war in Ukraine would neither normalise nor escalate and that sanctions against Russia would remain in place.
Average inflation for 2022 was highest in the Baltics, where it was forecast to be 19.3% in Estonia, 18.9% in Lithuania, and 16.9% in Latvia this year.
EU labour markets are expected to react to the slowing economy but “remain resilient”, the EU said, with employment growth expected to be at 1.8% before “coming to a standstill in 2023”.
Unemployment rates in the EU were projected to be at 6.2% in 2022, 6.5% in 2023, and 6.4% in 2024.
GDP growth is expected to be stronger than the EU first predicted, at around 3.3% in the European Union due to the easing of COVID-19 measures.
But that GDP growth will be around just 0.3% in the EU and euro area in 2023, the European Commission predicted.
( Source Euronews)
