Europe To Suffer From Higher Energy Prices, Inflation In 2022, But Not Long-Term - Expert

The European Union will not experience high energy prices and ensuing inflation in Europe for a long time, and the European Commission (EC) is right to be cautiously optimistic about growth rebounding after winter, Etienne de Callatay, a manager of Orcadia Asset Management in Luxemburg and professor of macroeconomics at the University of Namur, told Sputnik

BRUSSELS (UrduPoint News / Sputnik - 10th February, 2022) The European Union will not experience high energy prices and ensuing inflation in Europe for a long time, and the European Commission (EC) is right to be cautiously optimistic about growth rebounding after winter, Etienne de Callatay, a manager of Orcadia Asset Management in Luxemburg and professor of macroeconomics at the University of Namur, told Sputnik.

Earlier in the day, the European Commission published a report predicting that energy prices in the EU will remain high throughout 2022, while inflation across the bloc will rise to 3.9% from 2.9%. Nevertheless, inflation is expected to subside to 2% in 2023 with pressures from supply constraints and energy prices disappearing.

"There is a significant inflationary surge in Europe at the start of 2022 (more than 7% in January and probably 4-5% for the year), mainly due to the spectacular rise in energy prices," de Callatay said, attributing it to Brussels climate change policies, but maintaining that "this inflation could last a little longer than initially expected, but the runaway energy price has reached a ceiling, and beyond that it no longer generates inflation, even if the price of energy remains high.

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The expert predicted that economic recovery in Europe will continue, noting that unemployment on the continent is below the level of two years ago, with workers being relatively well-protected and social benefits in most European countries being indexed and increased to keep up with inflation.

"I believe that the European Commission is prudent and reasonable in its 'Winter 2022 Economic Forecast': growth is indeed expected to regain traction after the winter slowdown. The report is cautiously optimistic. This is also my prediction," de Callatay stated.

As the COVID-19 epidemic was unfolding in 2020, European countries adopted severe restrictions to stop the virus from spreading, disrupting the global economy in the process. The following year saw a substantial recovery following the lifting of some restrictions coupled with the international COVID-19 vaccine rollout.

However, the ongoing wave of the Omicron variant has dampened the recovery process by straining Europe's healthcare system as well as resulting in renewed health restrictions and an unprecedented surge of absences from work in many EU countries, according to the EC.