The EU Commission expects record inflation of 7.4 percent instead of 6 percent in Austria in 2022. The economic outlook, on the other hand, has been revised downward.
Russia’s war of aggression against Ukraine continues to harm the EU economy and thus also Austria. The EU Commission has revised its economic outlook downward compared to the spring forecast and sees less growth and higher inflation in the EU countries and Austria than in May.
EU Commission raises inflation expectations
According to the forecast, inflation in this country is likely to average 7.4 percent in 2022 and only weaken to 4.4 percent in 2023.
In its last forecast in May, the Brussels-based authority still assumed inflation in Austria of 6.0 percent in 2022 and expected it to fall to 3.0 percent in 2023. The ECB is aiming for an inflation rate of 2 percent.
Ukraine war caused prices for energy and food to rise
“Many of the negative risks associated with the spring forecast have materialized. Russia’s invasion of Ukraine has put additional upward pressure on energy and food commodity prices,” the commission wrote Thursday in its summer forecast.
8.4 percent inflation expected in the euro area
The Commission also revised its inflation outlook for the euro area and the EU significantly upward from its spring forecast. The authority expects that inflation in the euro area will peak at 8.4 percent year-on-year in the third quarter of 2022 and decline steadily from there. It will likely fall below 3 percent by the final quarter of 2023.
The growth outlook for the economy poor
The growth outlook for the EU economies is similarly poor to the inflation outlook. The EU Commission has also revised its expectations and is forecasting an actual increase in the gross domestic product (GDP) in Austria of 3.7 percent for 2022. In May, the figure was still 3.9 percent. By 2023, GDP will grow by 1.5 percent instead of the recent 1.9 percent. The forecast says that growth will be supported by normalization in the service sector and in tourism. In the labor market, the shortage of skilled workers is becoming increasingly severe and is putting the brakes on the growth momentum.
GDP plus 2.7 percent for the EU economy
On the other hand, Austria’s figures for the past year 2021 have been somewhat revised upward – from 4.5 percent economic growth to 4.8 percent.
For the EU economy, the Commission forecasts GDP growth of 2.7 percent this year and 1.5 percent in 2023. The euro area’s growth is expected to reach 2.6 percent in 2022, slowing to 1.4 percent in 2023.
- source: APA/picture: pixabay.com
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