Thu | Aug 18, 2022

EU cuts forecast for economic growth as war’s fallout widens

Published:Monday | May 16, 2022 | 9:27 AM
A car stops in a gas station where prices are up to 2,75 euros per liter in Marseille, southern France, Wednesday, March 9, 2022. The European Union slashed its forecasts of economic growth in the 27-nation bloc amid the prospect of a drawn-out Russian war in Ukraine and disruptions to EU energy trade. (AP Photo/Jean-Francois Badias, File)

BRUSSELS (AP) — The European Union has slashed its forecasts for economic growth in the 27-nation bloc amid the prospect of a drawn-out Russian war in Ukraine and disruptions to energy supplies.

The EU's gross domestic product will expand 2.7% this year and 2.3% in 2023, the bloc's executive arm said Monday — its first economic predictions since Russia invaded Ukraine on February 24.

The European Commission's previous outlook expected growth of 4% this year and 2.8% in 2023.

The EU economy expanded 5.4% last year following a deep recession prompted by the COVID-19 pandemic.

GDP shrank 5.9% in 2020.

“Russia's invasion of Ukraine has posed new challenges, just as the union had recovered from the economic impacts of the pandemic,” the commission said when releasing the forecast.

“The war is exacerbating pre-existing headwinds to growth.”

The war has darkened what was generally a bright economic picture for the EU.

Early this year, European policymakers were counting on solid, if weaker, growth while grappling with surging inflation triggered by a global energy squeeze.

Now, energy has become a key problem for the EU as it seeks sanctions that deny Russia tens of billions in trade revenue without plunging member countries into recession. 

Soaring energy prices are driving record inflation, making everything from food to transport and housing more expensive.

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