The European Union’s economics chief said Russia’s war with Ukraine would trigger a slowdown in growth this year, warning that the bloc’s existing growth forecast of 4% was no longer sustainable.
EU Economics and Taxation Commissioner Paolo Gentiloni said on Saturday that the Ukraine crisis would usher in a period of weaker growth for the 19 countries sharing the euro.
The bloc’s projection of 4% growth in 2022, released shortly before Russia’s February 24 invasion of Ukraine, will have to be revised down, he said.
However, in an attempt to lessen the sting of the pessimistic valuation, Gentiloni said there was no prospect of a recession.
“The good thing is that we entered this crisis five weeks ago [on] a good base, and we were estimating for this year a growth of 4%,” Gentiloni told CNBC’s Steve Sedgwick at the Ambrosetti Forum in Cernobbio, Italy.
“It’s going to slow down for sure, but the carryover from the previous situation of how our economy went in 2021 is going to stay. And I think we’re not at risk. [of] globally entering negative territory in 2022,” he added.
Gentiloni said the economic outlook hinges on three factors: how long Russia’s assault on Ukraine lasts, whether sanctions dynamics will affect Russia’s energy exports, and how the Ukraine crisis could affect investor confidence and consumers.
“That’s why I think we need to reassure our citizens, our business people that yes, we’re going to slow our growth but we’re not going into a recession,” Gentiloni said.
His comments repeated remarks made earlier in the week, in which Gentiloni stressed the importance of ensuring that the economic recovery is not derailed by the actions of the Kremlin and said that the Ukraine crisis must not lead to further divergence within the block.
The EU is believed to be preparing new economic sanctions against Russia, although Gentiloni told Reuters on Saturday that any additional measures would not affect the energy sector.