Nov. 11 (UPI) — Most European Union countries are likely heading into an economic recession by the end of this year, the bloc said on Friday.
Due to Russia’s invasion of Ukraine, the energy crisis that has arisen from that, and inflation, the economic outlook for 2023 is significantly weaker than earlier forecasts, Brussels said.
“The EU is among the most exposed advanced economies (to high prices), due to its geographical proximity to the war and heavy reliance on gas imports from Russia,” the European Commission said in a statement. “The energy crisis is eroding households’ purchasing power and weighing on production.”
Inflation is not expected to peak until the end of the year and could remain at 7% through next year. It’s expected to decline to 3% by 2024. Earlier reports in the summer said that inflation would only be at 5% next year.
One positive note is that labor markets are expected to remain resilient, the commission said. Unemployment is projected at 6.2% for 2022, and then will only tick up slightly to 6.5% in 2023.
While GDP growth in 2022 is expected to be 3.3%, due to strong growth in the first half of the year, GDP growth is expected to fall to just 0.3% in 2023.
“The economic situation has deteriorated markedly and we are heading into two quarters of contraction,” said EU economy commissioner Paolo Gentiloni at a press conference, according to Euronews.