European Union countries are suffering heavy losses from the military invasion that Russia has launched in Ukraine, but whether the bill will be divided among all countries in the block. The European edition points out that it is economic losses that prevent the community from standing united in this case.
The first calculations of the European Central Bank (ECB) show that the European economy will slow down due to the war in Ukraine. The institution forecasts growth of 3.7% in 2022, ie 0.7 points lower than the previous forecast in December 2021. Goldman Sachs even forecasts a 1.4 percentage point drop in the eurozone gross domestic product.
The European Commission (EC) also reiterated expectations of a decline, but said the war would not hamper the European economy.
The countries of the community are already ready with their calculations – Italy, for example, has reduced its growth forecasts against the background of inflation and lost markets in Russia. Cyprus also has serious concerns as its economy depends on tourism, and Russian tourists are unlikely to arrive this year. Russians make up about a fifth of the island’s foreign visitors.
Bulgaria has warned the EU to prepare for the “Chernobyl scenario”, fearing a nuclear incident in Ukraine that would destroy crops.
But the most serious differences are in terms of gas – Russia has a share of about 40% of total imports of raw materials. However, for countries such as Austria, Hungary, Poland, Bulgaria, Estonia and Latvia, this percentage is over 80 percent. Germany, Europe’s largest consumer of Russian gas, relies on Russia for about half of its imports. For Italy this share is about 1/3 of the total imports.
Or for everyone, the threat is serious, but each country focuses on its dimensions. At this stage, European leaders say the price will be high, but worth it.
“We are aware that this will lead to losses for the European economy, but the answer is not to reduce the pressure from Russia,” said Italian Prime Minister Mario Draghi.
The answer is for countries to be on a common front, to support European economies and businesses, as well as the purchasing power of households, he said during an informal meeting of European leaders in Versailles late last week.
During the talks, France and Italy proposed issuing a new European debt to cover the costs of energy security and defense of the Community. But Germany, the Netherlands and Sweden have spoken out. Now the focus is on Brussels, where the community finance ministers are already speaking yesterday and today.
However, Allianz analysts estimate that with oil prices at $ 150 a barrel and gas at 200 euros per megawatt-hour, inflation in the eurozone will reach 6% – not enough for a recession, but would seriously increase output. It is believed that the price for some countries will be even higher.