ANKARA

S&P Global Ratings announced on Monday it lowered eurozone growth estimates for 2022 and 2023 due to high inflationary pressures.

Eurozone economy is now expected to expand 2.6% this year and 1.9% next year, which are down from the global rating agency's previous forecasts of 2.7% and 2.2% that were made in May.

"Higher inflationary pressures are the main driver of our downward revision," it said in a statement, adding that "high inflation is now starting to bite into households' savings buffers."

While annual inflation in the eurozone climbed to a new record high of 8.1% in May, S&P also revised up its expectations for inflation.

The agency now estimates consumer inflation to come in at 7% in 2022 and 3.4% in 2023, up from its previous forecasts of 6.4% and 3%, respectively.

"We expect rising energy prices will contribute one-half of these pressures this year, while we see food and services prices taking over as the biggest impetus of price rises in 2023," it said.

S&P said it "barely expects" the eurozone economy to grow during the remaining three quarters of this year, as downside risks to economic growth remain significant, mostly related to Russia's war on Ukraine.

"Gas shortages could become more pronounced this year, which would be another blow for consumers and may – in the most extreme case – also result in a halt of production altogether for some firms if substitute sources of energy are only partially available," the agency said.