“In areas such as food and raw materials, the war has led to price increases and the spike in raw material prices on our world markets is currently generating inflation in the eurozone, but to date, neither the European Commission nor the the European Central Bank detected signs that these prices are fueling an inflationary spiral in the euro area, in wages and in other factors of our economy, which react to these price increases”, underlined Paschal Donohoe.
Speaking at a conference after a meeting of the Eurogroup, in Luxembourg, the president of the structure that brings together the finance ministers of the euro zone assured that these price increases are and will continue to be “monitored very closely”.
According to Paschal Donohoe, one of the consequences that the war has for the eurozone economy is, “clearly, in the area of energy and increasingly in food prices and in the disruption of supply chains”.
“And, of course, what this does for governments for citizens and for businesses is that it creates uncertainty and we recognize that economic growth will slow down this year,” he admitted.
Faced with this “risk of uncertainty”, Paschal Donohoe stressed that “the Eurogroup made clear the need for budgetary policy to be agile and to respond to changes in the situation”.
“We recognize the impact that this war is having within the EU, in terms of rising energy prices, and what that means for living standards and we recognize that these increases are having an impact on our society and our cost. of life, both in the short term and in the long term”, he added.
Also present on the occasion, the European Commissioner for the Economy, Paolo Gentiloni, acknowledged that the economic growth of the euro zone will be lower than previously expected for this year, which was 4% of the Gross Domestic Product (GDP), which should become clearer. with the estimates that will be released at the end of the month by the community statistical office, Eurostat.
Even so, “we will not reach negative territory due to the base we were on at the beginning of this crisis”, guaranteed Paolo Gentiloni.
At the press conference, Paschal Donohoe also welcomed the participation for the first time in a meeting of the Eurogroup of the Portuguese Finance Minister, Fernando Medina, who debuted on the occasion after taking office a few days ago.
The statements come at a time when prices in the EU are hitting highs due to constraints in supply chains, recently exacerbated by the geopolitical tensions of the Ukraine war.
In March, the eurozone’s annual inflation rate soared to a new high of 7.5%, compared to 5.9% in February, according to Eurostat.
Inflation is, these days, more pronounced in terms of energy prices, with prices of fossil fuels (such as gas) having soared in recent weeks and reached the highest levels of the last decade due to fears of a reduction in supply caused by the invasion Russian from Ukraine.
Russia launched a military offensive in Ukraine on February 24 that killed at least 1,430 civilians, including 121 children, and injured 2,097, including 178 minors, according to the latest UN data, which warns of the likelihood of the real number. of civilian casualties be much higher.
ANE // CSJ