Russia's war stifles EU pandemic recovery

"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.