The European Union has slashed its forecasts for financial progress within the 27-nation bloc amid the prospect of a drawn-out Russian battle in Ukraine and disruptions to vitality provides.
The EU’s gross home product will broaden 2.7 per cent this yr and a pair of.3 per cent in 2023, the bloc’s govt arm stated Monday — its first financial predictions since Russia invaded Ukraine on February 24.
The European Commission’s earlier outlook anticipated progress of 4 per cent this yr and a pair of.8 per cent in 2023.
The EU financial system expanded 5.4 per cent final yr following a deep recession prompted by the COVID-19 pandemic. GDP shrank 5.9 per cent 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 fee stated when releasing the forecast. “The war is exacerbating pre-existing headwinds to growth.” The battle darkened what was usually a shiny financial image for the EU.
Early this yr, European policymakers had been relying on stable, if weaker, progress whereas grappling with surging inflation triggered by a world vitality squeeze.
Now, vitality has develop into a key downside for the EU because it seeks sanctions that deny Russia tens of billions in commerce income with out plunging member nations into recession. Soaring vitality costs are driving file inflation, making all the things from meals to housing costlier.
Russia is the EU’s prime provider of oil, pure gasoline and coal, accounting for round 1 / 4 of the bloc’s complete vitality. EU imports of vitality from Russia final yr totaled 99 billion euros (USD 103 billion), or 62 per cent of the bloc’s purchases of Russian items.
An EU ban on coal from Russia is because of begin in August and a voluntary effort is underway to cut back demand for Russian pure gasoline by two-thirds this yr.
A proposed oil embargo has hit roadblocks amid reservations from some landlocked nations which are extremely depending on Russian oil, akin to Hungary.
All of this has left the EU scrambling to safe different provides of vitality within the coming months, together with from fossil-fuel exporting nations such because the United States and from home renewable sources meant to assist the bloc obtain its longer-term local weather targets.
Source: www.financialexpress.com”