The European Commission now expects the EU and euro area to contract in the last quarter of this year and first quarter of 2023, amounting to a technical recession, before returning to positive growth next spring.
Growth forecasts for 2023 were slashed to 0.3 percent in both the EU and the euro area, a cut of over one percentage point from the previous estimates in July. The downgrade is mostly the consequence of Russia’s war on Ukraine, which exacerbated the energy crisis and drove up inflation, as well as tightening financial conditions and hitting business confidence.
“We are approaching the end of a year in which Russia has cast the dark shadow of war across our continent once again,” said EU Economy Commissioner Paolo Gentiloni. “Soaring energy prices and rampant inflation are now taking their toll and we face a very challenging period both socially and economically,” he said.