The European Commission, the executive arm of the European Union, expects the eurozone economy to grow by 3.2% in 2022, with a strong deceleration in 2023, when it is expected to grow by only 0.3%. In addition, he expects inflation to remain strong in the region, in addition to highlighting the “exceptional uncertainty” of the economic scenario, given the Russian war in Ukraine and its effects. The agency published this Friday (11) its report on Economic Forecast for Autumn 2022.
The EU says that, after a “strong” first half, the bloc’s economy enters “a much more challenging phase”. The shocks caused by the war on the continent harm global demand and reinforce inflationary pressures around the world. The EU also recalls that it is among the advanced economies most exposed to the problem, due to the proximity to the conflict and the “strong dependence on gas imports from Russia”.
The energy crisis erodes the purchasing power of families and weighs on production. As a result, the revision for 2022 Gross Domestic Product (GDP) was up, but the 2023 revision was “significantly weaker” compared to the European Commission’s summer projections. Across the EU, the forecast is now for growth of 3.3% in 2022 and also 0.3% in 2023.
For 2024, the European Commission projects growth of 1.5% in the eurozone and 1.6% across the EU.
Projections also point out that inflation will still peak in the region, before “gradually decelerating”. For the current year, the European Commission expects the consumer price index to stand at 8.5% in the eurozone (and at 9.3% in the EU). In 2023, the forecast is for an increase of 6.1% in the CPI in the euro zone and of 7.0% in the EU, and in 2024 a rise of 2.6% in the euro zone and of 3.0% in the whole the block. The Commission recalls that, compared to the projections of a semester ago, there was an upward revision of almost 1 percentage point in the CPI for 2022 and of more than 2 points in 2023.
Even with the “challenging environment”, the job market has remained strong, the report says. The EU projects unemployment rates across the bloc to stand at 6.2% in 2022, 6.5% in 2023 and 6.4% in 2024.
The report also highlights, however, the high degree of uncertainty. For the European Commission, the war in Ukraine still has clear potential to cause economic problems. The biggest threat is from adverse events in the gas market and the risk of a shortage, especially in the local winter of 2023-2024, the text reads.
The European Commission recalls that it publishes these more comprehensive projections twice a year, in the local spring and autumn, in addition to two “interim projections”, in winter and summer.
May forecast
As a comparison, in its May projections the European Commission expected growth of 2.7% in GDP in the euro zone this year and 2.3% in 2023. For consumer inflation (CPI), expectations were for highs of 6.1% and 2.7%, respectively.
Source: CNN Brasil
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