16 May 2022

Remarks by Commissioner Gentiloni at the Spring 2022 Economic Forecast press conference

We now forecast the EU economy to grow by 2.7% this year before slowing further to 2.3% in 2023. For 2022, this is 1.3 percentage points lower than projected in February, one of the steepest downgrades between forecasts of recent years.

Let me begin with the five key messages emerging from this forecast:

First, compared to our Winter Forecast, published two weeks before Russia's invasion of Ukraine, growth in the EU economy is revised lower, and inflation higher.

We now forecast the EU economy to grow by 2.7% this year before slowing further to 2.3% in 2023. For 2022, this is 1.3 percentage points lower than projected in February, one of the steepest downgrades between forecasts of recent years. Annual inflation is expected to hit an all-time high of 6.8% this year, and to fall to 3.2% in 2023.

Second, the war has clearly exacerbated the headwinds that were previously expected to gradually fade. These include the sharp rise in commodity prices and the aggravation of existing supply-side disruptions, as well as the emergence of new ones, for instance in transport and logistics.

Third, a strong and improving labour market, decreasing household saving rates, favourable financing conditions and the full deployment of the Recovery and Resilience Facility are set to support the economy.

Fourth, government deficits and debt ratios are forecast to decline this year and next. Governments are in the process of phasing out the COVID-19 emergency support measures and the cyclical rebound in revenues is in full swing.

• The aggregate budget deficit in the EU should decline from 4.7% in 2021 to 2.5% in 2023.
• The aggregate debt-to-GDP ratio is projected to continue on the downward trend, falling from 7% in the EU in 2021 (97.4% in the euro area) to 85.2% in 2023 (92.7% in the euro area).

And fifth, uncertainty around the outlook has clearly increased and risks have tilted to the downside and are predominantly related to the duration of the war. Given the unprecedented nature and size of the shocks affecting the EU economy, our forecast baseline is underpinned by several technical assumptions...

more at European Commission

full forecasthttps://ec.europa.eu/commission/presscorner/detail/en/IP_22_3070

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