Europe slows growth for two years and inflationary pressures continue


The European Commission has released economic forecasts for the winter of 2022 this year and next. It is projected to grow at a slower pace than in 2021 due to high energy costs, supply chain issues, and the turmoil in COVID-19.

Last year, the European Union (EU) economy expanded by 5.3%. According to economic forecasts on February 10, the 2022 Commission predicts that growth will drop to about 4% and further to 2.8% in 2023. Press release.. The EU reached pre-pandemic GDP levels in the third quarter of 2021. By the end of 2022, all member states are expected to pass this milestone.

Last spring, the EU saw a recovery in economic activity, which continued strongly for the first three quarters. Growth fell to 0.4% in the last quarter. Despite this expected slowdown, it was “sharper than expected” as the challenge to growth intensified.

Such challenges included a surge in COVID-19 infections due to the epidemic of Omicron mutants, supply chain disruptions, and high energy prices. These pressures are expected to continue to some extent this year.

Economic growth will be impacted as shortages of semiconductors, some key metals, and other supply bottlenecks will weigh on production activity in the region, at least in the first half of 2022.

Energy prices are projected to continue to rise, not only hampering economic growth, but also pushing up inflationary pressures. In the long run, the European Commission sees the EU’s enlargement phase remain strong, with favorable funding, high household savings and a strong labor market.

Inflation in the euro area reached a record 4.6% in the fourth quarter of 2021. The Commission expects inflation to peak at 4.8% in the first quarter of this year. Inflation is expected to remain above 3% until the third quarter, after which it could drop to 2.1% due to lower energy prices and supply constraints.

Inflation in Europe has been fixed at 3.5% in 2022, up from 2.6% last year. The European Commission then states that this will fall below the European Central Bank’s target of 2% in 2023.

“Inflation and sharp rises in energy prices are curbing growth, along with supply chain and labor market bottlenecks, but in the future some of these bottlenecks will ease, so later this year. EU fundamentals will continue to be strong and will be further strengthened as countries begin to fully implement recovery and resilience plans, “said Deputy Economics, working for people. Chairman Valdis Donbroski said in the report.

Uncertainties and risks associated with winter forecasts remain “high”, mainly due to the unpredictability of the COVID-19 pandemic, said Paolo Gentiloni, Economic Commissioner. Press conference Reveal the report.

Germany, which grew 8% in 2021, is projected to grow 3.6% in 2022 and 2.6% in 2023. In other major countries such as France, Italy and Spain, growth in 2022 is expected to be 3.6% and 4.1%. And 5.6 percent.

Naveen Athrappully

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Naveen Athrappully is a news reporter covering business and global events in The Epoch Times.

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