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Headquarters of the EU Commission in Brussels: “Price pressure remains high
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Arne Immanuel Bänsch / dpa
According to the EU Commission, the economy in the euro zone should pick up again in the spring, despite the fact that inflation will remain high for the time being.
The gross domestic product (GDP) is expected to increase by four percent this year.
In its forecast updated on Thursday, the Brussels authorities also predicted a much higher rate of price increases for 2022 than assumed in the autumn: it should climb to 3.5 percent, well above the ECB’s target of two percent.
The Commission thus expects higher inflation than the ECB.
This had assumed three percent at the beginning of February.
According to the forecast by the EU Commission, prices should rise by an average of 4.8 percent in the first three months of this year.
That's just below the eurozone's record 5.1 percent in January.
"The price pressure will probably remain high until the summer," warned EU Commissioner Paolo Gentiloni.
In the fall, the EU Commission was still assuming an inflation rate of just 2.2 percent for 2022.
According to the EU Commissioner, however, an easing of the supply bottlenecks and only moderately increasing energy prices can be expected from autumn onwards.
In 2023, it can be expected that the European Central Bank's (ECB) target of two percent will be undercut again with an expected inflation rate of 1.7 percent.
"Nevertheless: Uncertainty and risks remain high," admitted the Economic and Monetary Affairs Commissioner, with a view to disruptive factors such as the pandemic and the crisis in Eastern Europe.
Growth forecast slightly lowered for 2022, increased for 2023
Despite the high inflation, which is a burden for companies and consumers, the authority expects an upswing in the currency union.
Although it lowered its growth forecast for the current year from 4.3 to 4.0 percent, it raised it for 2023 from 2.4 to 2.7 percent.
"Strong headwinds have cooled the European economy this winter: the rapid spread of omicron, a further rise in inflation due to rising energy prices and ongoing supply chain disruptions," Gentiloni said.
However, the headwind will gradually subside.
“We expect growth to pick up speed again as early as spring,” said the Italian.
All Member States should return to their pre-crisis levels in the course of the year.
For Germany, the EU Commission lowered its growth forecast for this year from 4.6 to 3.6 percent, but raised it for 2023 from 1.7 to 2.6 percent.
sol/AFP/Reuters