BRUSSELS: European Union's top-most economic official on Monday warned of an economic contraction in the 19-member Eurozone while predicting that energy prices will remain high.
"The inflation in the euro area has climbed to 10.7 percent, and if we look at high frequency indicators and the economic sentiment, we see that many things point to a contraction in economic activity this winter, in the coming months," said EU Commissioner for Economy Paolo Gentiloni at a press conference in Brussels after a formal meeting of Eurozone finance ministers.
"We need to work together to improve our performance, not least because we can expect energy prices to remain high for some time to come," Gentiloni added.
Paschal Donohoe, president of the Eurogroup, told the joint press conference that everyone has known for some time that the economy within the area is slowing.
"The European Commission forecasted growth of 2.7 percent for 2023 before Russia began its awful war on Ukraine. The latest figure for growth for the euro area in October is now 0.5 percent. We will get further details on growth expectations from the Commission when they publish their forecast at the end of the week," Donohoe said.
As the wider picture of inflation, economic disruption and geopolitical turmoil impact banks, and the financial sector more broadly, maintaining sound policies and continuing careful monitoring was needed, he stressed.
According to estimates by the European Commission, euro area governments have so far collectively spent about 1.25 percent of euro area GDP, about 200 billion euro ($200 billion), on energy support for the year, Donohoe noted.
