Press Release: EU interim forecasts: sharper-than-expected slowdown

Economic growth is expected to post 1.4% this year in the European Union (1.3% in the euro area) - around ½ percentage point less than forecast in April. The main downside risks identified in the spring forecast have materialised, with the financial turmoil deepening, commodity prices soaring and the shocks to several housing markets spreading more widely. Inflation is expected to average 3.8% in the EU and 3.6% in the euro area this year following the continued strong rise in commodity prices. This represents an upward revision, although inflation could be at a turning point as the impact of past increases in energy and food prices gradually fades in the coming months.