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The European Fee minimize its forecasts for financial progress within the euro zone for this 12 months and subsequent and revised up its estimates for inflation on Thursday (July 14) largely as a result of affect of the struggle in Ukraine.
In its quarterly forecasts, Brussels confirmed its extra downbeat outlook, which it had already mentioned with euro zone finance ministers on Monday.
The EU govt now predicts progress of two.6% this 12 months for the 19-country foreign money bloc, barely lower than the two.7% it had forecast in Might.
However subsequent 12 months, when the affect of the Ukraine struggle and of upper vitality costs could also be felt much more acutely, progress is now forecast to be 1.4%, as an alternative of the two.3% beforehand estimated.
At a information convention, EU economic system commissioner Paolo Gentiloni additionally stated the autumn of the euro to parity in opposition to the greenback was a serious concern largely for creating economies, reasonably than for the euro zone, as a result of the euro was appreciating in opposition to different main currencies.
For the broader 27-country European Union, the expansion forecast was unchanged at 2.7% this 12 months, however revised right down to 1.5% in 2023 from 2.3%.
In a serious change, the Fee additionally raised its estimates for euro zone inflation, which this 12 months is now anticipated to peak at 7.6% earlier than falling to 4.0% in 2023.
In Might, the Fee had forecast costs within the euro zone would rise 6.1% this 12 months and a couple of.7% in 2023.
Brussels warned headline inflation might transfer even greater if gasoline costs soared resulting from Russia reducing off provides, which could result in an extra downward revision of progress.
Dangers to the outlook from a resurgence of the COVID-19 pandemic might additionally not be dominated out, the Fee stated.
Regardless of these excessive dangers, the Fee underlined that the euro zone was not anticipated to tip right into a recession and the forecasts might additionally enhance if current declines of oil and commodity costs continued.
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