Eurozone inflation, things will get worse before they start to get better — MercoPress
Eurozone inflation, things will get worse before they start to get better
The finance ministers of the Eurogroup (countries using the euro) have declared that the fight against inflation is their number one priority. The announcement follows revised economic forecasts from the European Commission anticipating declining growth and growing geopolitical and natural disruptions for businesses, the biggest drags on the economy as a whole.
“What we’re seeing is that economic growth is proving quite resilient this year. Still, we can expect a downward revision and even more for next year due to many uncertainties and risks,” said Valdis Dombrovskis, Executive Vice-President of the European Commission for an Economy that Works for People. , speaking in Brussels.
Moreover, suggested Dombrovskis, “inflation is going to be revised upwards.”
Economy Commissioner Paolo Gentiloni has issued a new warning, saying the risk continues to rise in the face of Russian gas supply cuts. “We are heading into choppy waters,” he said, alluding to “very limited, reduced and slower economic growth” due to the worsening energy crisis caused by the Russian invasion of China. ‘Ukraine.
“What we’re seeing is these high energy prices trickling down to the rest of the economy and inflation taking root and becoming more widespread,” Dombrovskis warned.
Other financial institutions, such as the International Monetary Fund (IMF), have also warned of the impact of the war in Ukraine on eurozone economies.
The European Commission originally forecast economic growth of 4% this year, but it is now expected to drop to 2.7%. The forecast for next year looks even bleaker – originally set at 2.7%, it has now been revised down to 2.3%.
Annual inflation, which had been estimated at 3.5%, instead rose to 6.1%, and monthly inflation for June climbed to 8.6%. The European Central Bank is expected to raise interest rates for the first time in eleven years on July 21.