STORY: The European Commission on Thursday (July 14) cut its forecasts for economic growth in the euro zone for this year and next, and revised up its estimates for inflation, largely because of the war in Ukraine.

In its quarterly forecast, the EU executive predicted growth of 2.6% this year for the 19-country bloc, only slightly less than it had forecast in May.

But next year, growth is forecast to tumble to 1.4%, down from the 2.3%, predicted earlier, as the impact of the Ukraine war and higher energy prices are felt more acutely.

Economy commissioner Paolo Gentiloni said the European economy was shifting from slowing growth to hitting the brakes.

"We identified in the previous forecast many risks, and many of them have materialised. We identified risks such as shocks reverberating from an unpredictable evolution in the energy market, we mentioned tighter financial conditions and a global economic slowdown. All of these risks have materialised, of course to various degrees."

In bad news for consumers, the Commission sharply raised its estimates for euro zone inflation.

Price rises are now expected to peak at 7.6% this year before falling to 4% in 2023.

They could move even higher if gas costs soar again due to Russia cutting off supplies.

The Commission said the outlook could also get worse if there is a resurgence of the health crisis.

Despite all the risks, officials underlined that the euro zone was not expected to tip into a recession.

They said those forecasts could improve if recent declines in oil and commodity prices continued.