EU commission cuts eurozone growth forecast for 2023

By Tuba Sahin

ANKARA (AA) – The European Commission on Monday lowered its 2023 growth forecast for the euro area to 2.3% amid Russia’s war on Ukraine.

"Real GDP growth in both the EU and the euro area is now expected at 2.7% in 2022 and 2.3% in 2023, down from 4.0% and 2.8% (2.7% in the euro area), respectively, in the Winter 2022 interim forecast," the commission said in its latest report.

It expected that the eurozone consumer inflation would ease to 2.7% next year after hitting 6.1% in 2022 due to elevated energy commodity prices, above the European Central Bank's target.

In the EU, annual consumer inflation is forecast to average an all-time high of 6.8% this year, before declining to 3.2% in 2023.

The EU unemployment rate is expected to decline further, to 6.7% this year and 6.5% in 2023.

"People fleeing the war in Ukraine to the EU are expected to enter labor markets gradually, with tangible effects only from next year," it added.

The commission expected the eurozone budget deficit to fall 3.7% of gross domestic product (GDP) in 2022 from 5.1%. The figure is projected to decrease further to 2.5% next year.