Successful management of energy crisis is key to avoiding recession, says EU's Dombrovskis

Europe's ability to avoid a recession depends on it being able to ride out the current energy crisis, the Vice President of the European Commission and EU Trade Commissioner Valdis Dombrovskis has told Euronews.

Dombrovskis said that although growth in the first half of this year had been unexpectedly strong, a deteriorating environment is sapping confidence.

"What we are seeing actually is that this year, the first half of the year was actually quite strong," he told Shona Murray on The Global Conversation. 

"And if anything, we probably will be revising upwards this year's growth forecast, so from 2.7%, which is our current forecast. But also, we are seeing right now a rapidly deteriorating environment, with confidence indicators going rapidly down. 

"So I would say the economic outlook depends also to a large extent on how we will manage the current energy crisis," he told Euronews.

Dombrovskis said the European Union still has the capacity to help its citizens face up to the energy crisis, citing the unused €225 billion available from the Recovery and Resilience Facility Loans.

Shona Murray: The EU's announced this week, alongside the G7, a global price cap for Russian oil. But there are worries that this will trigger a rise in oil prices and even more instability. Are you confident that this will have the desired effect to impact on Russian revenue?

Valdis Dombrovskis: So in a sense, with this price cap, if it is implemented at at least the G7 but possibly also a broader level, on one hand, we would deprive Russia of additional revenues, which it could use to further finance its war against Ukraine. On another hand, it also helps to stabilize overall oil prices.

Shona Murray: But I think there's a concern obviously that not