Russia’s war with Ukraine will cause a growth slowdown this year, according to the European Union’s economics chief, who warns that the bloc’s current growth forecast of 4% is no longer viable.
Paolo Gentiloni, the European Commission’s commissioner for economics and taxation, said on Saturday that the Ukraine crisis will usher in a period of lower growth for the eurozone’s 19 countries.
He believes the EU’s forecast of 4% growth in 2022, released shortly before Russia’s invasion of Ukraine on February 24, will need to be revised downward.
Gentiloni, in an attempt to soften the blow of the downbeat assessment, said there was no chance of a recession.
At the Ambrosetti Forum in Cernobbio, Italy, Gentiloni told CNBC’s Steve Sedgwick, “The good thing is that we entered this crisis on a good footing, and we were estimating for this year 4 percent growth.”
“While this will slow, the carryover of the previous situation of how our economy performed in 2021 will remain. And I don’t believe we’re on the verge of entering negative territory in 2022,” he added.
The economic outlook, according to Gentiloni, is dependent on three factors: the length of Russia’s assault in Ukraine, whether sanctions will spread to Russia’s energy exports, and how the Ukraine crisis will affect investor and consumer confidence.
This is why, in my opinion, we need to reassure our citizens and businesspeople that, while growth will slow, we will not enter a recession,” Gentiloni said.
His remarks echoed Gentiloni’s remarks earlier this week, in which he stressed the importance of ensuring that the bloc’s economic recovery is not derailed by the Kremlin’s actions, and said the Ukraine crisis must not lead to increased divergence.
The EU is rumored to be planning new economic sanctions against Russia, though Gentiloni told Reuters on Saturday that any new sanctions would have no impact on the energy sector.
Source: CNBC
