The war in Ukraine knocks down forecasts on the trend of GDP of Italy and the Eurozone. According to European Commission, who published new estimates on the future of the EU economy on Monday, this year the Italian GDP is expected to grow by 2,4%, almost half of the +4,1% expected last February. Estimates for 2023, on the other hand, have been cut from +2,3 to +1,9%.
Inflation and unemployment in Italy
The inflation rate is expected to come in at 5,9% this year and 2,3% next year (after 1,9% in 2021).
Unemployment, on the other hand, should remain substantially stable compared to 2021, at 9,5%, before falling to 8,9% in 2023.
The new forecasts on the GDP of the Eurozone and the EU
The ax also falls on growth forecasts relating to the whole Eurozone: the estimate for 2022 is cut by 4 to 2,7%, while the one on 2023 by 2,7 to 2,3%.
The variations also at the level are almost the same Ue: respectively from 4 to 2,7% and from 2,8 to 2,3%.
Inflation and unemployment in Europe
As for the average inflation rate, this year in the euro area it is expected to reach 6,1% compared to 2,6% in 2021 (February estimate 3,5%), before falling to 2,7% in 2023 (against a February estimate which did not go beyond 1,7%).
The unemployment rate is expected to stand at 7,3%, down from 7,7% in 2021 to reach 7% next year.
In the EU the inflation rate will be 6,8% this year and 3,2% next year. Unemployment at 6,7% and 6,5% respectively.
Great uncertainty for Ukrainian war and impact on energy markets
The risks to forecasting economic activity and inflation”they strongly depend on the evolution of the war, and above all on its impact on the energy markets”. This is what the European Commission indicates in its spring economic forecast report.
Given the high uncertainty, the baseline forecast is accompanied by a scenario analysis based on models simulating the impact of rising energy commodity prices, as well as a sharp cut in gas supplies from Russia.
In the latter, more severe scenario, GDP growth rates would be around 2,5 and 1 percentage point below the forecast reference value in 2022 and 2023 respectively, while inflation would rise by 3 percentage points in 2022 and more than one percentage point in 2023, above baseline projections.
Gentiloni: we are still far from a normal economic situation
Because of the conflict in Ukraine, "we are still far from a normal economic situation", said the EU commissioner for economic affairs, Paolo Gentiloni.
The decision on the suspension of the European budgetary rules depends on Brussels' judgment on the evolution of the economy, which could be extended in full also in 2023.
