BRUSSELS (REUTERS) – Euro zone finance ministers said on Monday (July 11) the fight against inflation was the current priority despite dwindling growth in the bloc, as they are set to be informed of a deteriorating economic outlook by the European Commission (EC).
At a regular monthly meeting of ministers, the EU’s executive commission will give an update of its economic forecasts, showing slower growth and higher inflation, the commission’s vice-president Valdis Dombrovskis said on the sidelines of the meeting.
“One can expect some downward revisions, even more so for next year,” Mr Dombrovskis said, adding that growth remained resilient.
He said “inflation is going to be revised upwards”, anticipating the substance of the commission’s forecasts, due to be unveiled on Thursday.
Economics commissioner Paolo Gentiloni warned that risks to the economy were increasing as Russia could cut its gas supplies to Europe. He added that Brussels could adopt a number of measures to reduce inflationary pressure from gas imports, including price caps, although no decision had been made on that yet.
In May, the EC had cut its growth forecasts for the 19 countries sharing the euro to 2.7 per cent this year from the 4 per cent predicted in February, and to 2.3 per cent next year from 2.7 per cent, in its first assessment of the impact of the war in Ukraine on the bloc’s economy.
Inflation was estimated in May to be 6.1 per cent for this year, which was in itself a major rise from the previously estimated 3.5 per cent.
Despite the expected further drop in economic growth, ministers are focusing on fighting inflation, indicating a will to shift further away from the massive economic stimulus offered during the acute phase of the Covid-19 pandemic.
“The priority is to contain inflation,” Spain’s Economic Minister Nadia Calvino told reporters before the meeting.
Inflation is a major concern and is there to stay at high levels also next year, Dutch Finance Minister Sigrid Kaag said.
To fight skyrocketing prices, estimated by statistics agency Eurostat at 8.6 per cent on the year in June, ministers are pushing for fiscal prudence.