BRUSSELS – The Russian war in Ukraine is expected to severely damage the European Union’s economy in the near future with annual declines and strong inflation, according to the bloc’s economic forecast.
Summer figures from 19 eurozone countries have set inflation rates to about 7.6% this year, the largest increase from its initial expectation of 6.1%. Last month, consumer prices rose 8.6% from last year. Growth expectations fell by 0.1 to 2.6% per annum, the largest decrease from last year’s growth by 5.3%.
“Russia’s war against Ukraine continues to wreak havoc on Europe and our economy,” said EU Vice President Valdis Dombrovskis.
The war has led to a sharp rise in electricity and food prices, leading to higher inflation and lower economic growth and consumer confidence. There are growing fears that the power crisis could escalate further if Russia reduces its available gas supply or shuts off taps as European nations scramble to refill their storage facilities in preparation for winter.
The EU has agreed that Russian President Vladimir Putin could undermine the European economy for the next several months and make any predictions come true.
“The risks to the economy and rising prices are highly dependent on the resilience of the war and in particular the effects on gas in Europe,” the EU said.
Rising electricity prices and rising prices are another factor in the economic crisis: the euro is moving closer to the dollar in 20 years.
To make matters worse, the recent increase in cases of COVID-19 cases is introducing new jitters.
“It is possible that the recurring epidemic in the EU will lead to economic instability and inevitability,” he said.
Economy Commissioner Paolo Gentiloni said: “In times of war and unpredictable gas gains, the predictions could be uncertain and some challenges.”
Flexibility, however, can also be tilted in some way, with the possibility that commodity prices and energy may fall sharply than is shown.
Following this year’s dark forecast, eurozone inflation is expected to rise 4% in 2023, still a significant increase in the forecast for 2.7% in the spring.
All of this is very different from the previous year, when the EU was returning to the epidemic and was preparing for a better time.
The eurozone countries have to deal with higher interest rates as the European Central Bank plans to raise interest rates next week for the first time in 11 years to curb rising inflation.
Energy poses a serious threat to the EU, which for many years relies heavily on Russian oil, natural gas and coal to support electric vehicles, factories, generators and generators.
And even though the EU imposes sanctions and imposes plans to extract coal and oil from Russia, it still relies heavily on gas.
European Commission chief Ursula von der Leyen said last week that the bloc should make emergency plans to prepare for a complete cut of Russian gas. If it could, it could have serious consequences for the entire economy.