5th Jul 2022

Russia's war stifles EU pandemic recovery

  • Gentiloni: 'The war has clearly exacerbated the headwinds that were previously expected to gradually fade' (Photo: European Union, 2022)
Listen to article

Europe's economic recovery from the coronavirus pandemic fallout is taking a hit from Russia's invasion of Ukraine.

Higher inflation and slower growth are among the projections the European Commission on Monday (16 May) announced.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"The war has clearly exacerbated the headwinds that were previously expected to gradually fade," economy commissioner Paolo Gentiloni told reporters in Brussels.

A surge in energy prices comes as the European Union tries to wean itself off Russian fossil fuels, amid obstruction from Hungary.

Meanwhile, the devastating impact and human toll of Russia's invasion in Ukraine will continue to have knock-on effects throughout the rest of Europe.

This includes the highest-ever rate of inflation in the history of the eurozone, registered at 7.5 percent in April.

The EU economic growth forecast has also been downgraded to 2.7 percent this year, before slowing further to 2.3 next year.

This is 1.3 percentage points lower than projected in February — before the outbreak of the war.

"[It is] one of the steepest between forecast downgrades," said Gentiloni.

Central and eastern European countries will be hit with a double-digit inflation.

In Lithuania, it is expected to rise to 12.5 percent, in Poland to 11.6 percent this year, in the Czech Republic to 11.7 percent.

Russia's war has also resulted in a sharp rise in commodity prices and supply chain disruptions.

But buffers like a strong labour market, good financing conditions, and the rollout of the EU's pandemic recovery plans are likely to soften the blow, he said.

More than 5.2 million jobs were created in 2021, while unemployment dropped by almost 1.8 million people.

And domestic demand is also expected to keep driving growth this year and next, he said.

At the same time, EU economies are expected to continue to grow. However, economic powerhouses like Germany are struggling.

Along with six other EU states, including Italy and Spain, Germany has yet to reach its pre-pandemic output level.

"Germany's GDP is expected to slightly contract in the second quarter," said Gentiloni.

This contraction is due in part to Covid-related lockdown in Chinese industrial hubs, he said.

Revealed: Big Oil shaped EU's gas-cutting strategy

Internal documents found EU Commission president Ursula von der Leyen and energy commissioner Kadri Simson coordinated their Russian gas cutting strategy with oil CEOs to determine which measures were "feasible".

Hungary wants EU billions for Russia oil-ban deal

Hungary is continuing to block an EU oil embargo on Russia, but there is optimism its objections can soon be overcome — perhaps within a few days to "a week or two", according to some EU foreign ministers.


EU leaders zoom in on sanctions and energy This WEEK

EU leaders are gathering in Brussels after they got stuck on imposing on oil embargo on Russia. Poland's recovery plan gets approved and Danish voters will vote in a historic referendum this week.

News in Brief

  1. Turkey signs Nato protocol despite Sweden extradition row
  2. European gas production hit by Norway strike
  3. EU Commission told to step up fight against CAP fraud
  4. Ukraine needs €719bn to rebuild, says PM
  5. Germany records first monthly trade deficit since 1991
  6. Pilots from Denmark, Norway, and Sweden strike
  7. Report: EU to sign hydrogen deal with Namibia
  8. Israel and Poland to mend relations

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. 'World is watching', as MEPs vote on green finance rules
  2. Turkey sends mixed signals on Sweden's entry into Nato
  3. EU Parliament sued over secrecy on Nazi MEP expenses
  4. Italy glacier tragedy has 'everything to do' with climate change
  5. The Digital Services Act — a case-study in keeping public in dark
  6. Report slams German opposition to new child sexual abuse rules
  7. Is China a challenge to Nato? Beijing responds
  8. ECB announces major green shift in corporate bond-buying

Join EUobserver

Support quality EU news

Join us