The European Union’s economics chief says Russia’s war with Ukraine will trigger a growth slowdown this year, warning the bloc’s existing growth forecast of 4% is now no longer viable.
European commissioner for economics and taxation, Paolo Gentiloni, said Saturday that the Ukraine crisis will usher in a period of lower growth for the 19 countries sharing the euro.
The bloc’s projection of 4% growth in 2022, issued shortly before Russia’s invasion of Ukraine on Feb. 24, will need to be revised downward, he said.
However, in an attempt to take the sting out of the downbeat assessment, Gentiloni said there was no prospect of a recession.
“The good thing is that we entered this crisis five weeks ago [on] a good footing, and we were estimating for this year 4% growth,” Gentiloni told CNBC’s Steve Sedgwick at the Ambrosetti Forum in Cernobbio, Italy.
“This will slow down, for sure, but the carryover of the previous situation of how our economy went in 2021 will stay. And I think that we are not running a risk [of] entering negative territory overall in 2022,” he added.
Gentiloni said the economic outlook hinged on three factors: the duration of Russia’s onslaught in Ukraine, whether sanction dynamics will spill over to Russia’s energy exports and how the Ukraine crisis may impact investor and consumer confidence.
“This is why I think we have to reassure our citizens, our business people that yes, we will slow down in our growth but we are not entering a recession,” Gentiloni said.
His comments echoed remarks made earlier in the week, in which Gentiloni emphasized the importance of ensuring the economic recovery is not derailed by the Kremlin’s actions and said the Ukraine crisis must not lead to increased divergence in the bloc.
The EU is thought to be preparing further economic sanctions against Russia, although Gentiloni told Reuters on Saturday that any additional measures would not affect the energy sector.