The war in Ukraine is slowing economic growth in the EU and raising inflation. This is happening mainly due to energy prices. However, government debt in EU countries is declining.
Due to the war in Ukraine, the EU Commission has drastically reduced its growth forecast for the European economy. According to the spring forecast, the economy of the EU and the eurozone countries is expected to grow this year by only 2.7 percent instead of the four percent previously expected. The inflation forecast for euro area countries in 2022 has almost doubled to 6.1 percent.
Brussels authorities clarified that the war in Ukraine and above all the persistently high prices of energy and other raw materials are continuing to put pressure on the economy. To these are added disruptions in supply chains.
For next year, the EU Commission assumes a 2.3 percent increase in the EU and the eurozone. In the February forecast, the commission had predicted for 2023 an increase of 2.8 percent for the EU and 2.7 percent for the eurozone countries.
Worse prospects for Germany too
The forecast for the German economy was also significantly corrected, in part due to the war in Ukraine. The EU Commission forecasts only a 1.6 per cent increase this year, up from the 3.6 per cent previously expected. Next year, Europe’s largest economy will grow by 2.4 percent instead of the 2.6 percent previously forecast.