BRUSSELS, Belgium — The EU warned Friday the eurozone was set to fall into recession this winter as Brussels hiked inflation forecasts for 2022 and 2023 on the back of high energy prices.
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Europe is reeling from the economic shockwaves unleashed by Russia's war on Ukraine that has fueled a spike in energy costs and hit the wallets of consumers around the continent.
The EU's executive arm said increased uncertainty and costs "are expected to tip" the eurozone and most of the bloc's member states into recession in the last quarter of this year.
"The contraction of economic activity is set to continue in the first quarter of 2023. Growth is expected to return to Europe in spring," the European Commission said.
"With powerful headwinds still holding back demand, economic activity is set to be subdued, with GDP growth reaching 0.3 percent in 2023."
The downbeat forecast came as the commission sharply raised its predictions for inflation this and next year.
It said eurozone inflation was expected to stand at 8.5 percent for 2022, a point higher than earlier forecast, and 6.1 percent in 2023, two points higher than predicted previously.
"Inflation has continued to rise faster than expected, but we believe that the peak is near. Most likely at the end of this year," EU economy commissioner Paolo Gentiloni said.
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