Sharjah24 – AFP: The European Commission on Monday sharply cut its eurozone growth forecast for 2022 to 2.7 percent, blaming skyrocketing energy prices caused by Russia's invasion of Ukraine.
The war also spurred the EU's executive to revisit its eurozone inflation prediction for 2022, with consumer prices forecast to jump by 6.1 percent year-on-year, much higher than the earlier forecast of 3.5 percent.
"There is no doubt that the EU economy is going through a challenging period due to Russia's war against Ukraine, and we have downgraded our forecast accordingly," EU executive vice president Valdis Dombrovskis said.
"The overwhelming negative factor is the surge in energy prices, driving inflation to record highs and putting a strain on European businesses and households," he added.
The EU warned that the course of the war was highly uncertain and that the risk of stagflation -– punishing inflation with little or no growth -- remained a real risk going forward.
If Russia, the EU's main energy supplier, should cut off its oil and gas supply to Europe completely, the commission warned that the forecast would worsen considerably.
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