The possibility of an economic downturn in the EU’s most dependent on Russian gas member states is open today, Economy Commissioner Paolo Gentiloni left in the event of the worst-case scenario of an immediate cut-off of gas supplies from Russia.
Gentiloni stressed that the Commission’s spring economic forecasts are subject to “very high uncertainty and risks” due to the war in Ukraine. He also explained that the Commission’s basic forecast for the economy is based on a model that simulates the impact of higher energy commodity prices – this is the unfavorable scenario – as well as a permanent shutdown of gas supplies from Russia – this is the worst scenario.
“In this last, serious scenario, GDP growth rates would be around 2.5 to 1 percentage point below the baseline scenario for 2022 and 2023 respectively, while inflation would increase by 3 percentage points in 2022. “More than 1 in 2023 above the baseline forecast. In both of these scenarios, growth within the year would be in negative territory,” he said.
“The serious scenario is very much linked to the dependence of EU countries on Russian gas,” Gentiloni said, avoiding to name the countries that are most dependent.
It is noted that the Commission forecasts for the EU and the euro area growth of 2.7% in 2022 and 2.3% in 2023. It also forecasts inflation of 6.1% in 2022 in the eurozone and 6.8% in the EU and inflation in 2023 2.7% for the euro area and 3.2% for the EU.
In conclusion, P. Gentiloni stressed that the unprovoked invasion of Russia by Ukraine causes untold suffering and destruction, but also burdens Europe’s economic recovery. “Last year’s strong economic recovery will have a lasting positive effect on growth this year. But that does not diminish the impact of the war on our economies – even if the strong political response implemented during the pandemic has strengthened resilience. us”. He added that at the moment the economy in the EU is still in a “very normal state”.