However, these policy actions must remain focused on the specific groups hardest hit by the crisis and must be of limited duration. Against this backdrop, according to the ECB September projection exercise, the euro area economy is expected to grow by 3.1% in 2022, before slowing down markedly in 2023 to 0.9% - from the 2.1% forecast in June. Although a recession in the euro area is not currently envisaged as the baseline scenario, it is becoming increasingly likely. Indeed, uncertainty is high and both inflation and GDP developments will depend heavily on in the severity of any energy supply disruptions and the winter conditions, which could lead to higher energy prices and more severe production cuts. With this in mind, the ECB has also prepared a downside scenario relating to the war in Ukraine and energy supply cuts. Under this adverse scenario, GDP would contract by 0.9% in 2023. This downside scenario entails a complete cut-off of Russian gas and oil flows to Europe. In addition, it assumes fewer possibilities for energy supply substitution and unusually cold winter weather triggering higher energy demand. As a result, commodity prices and uncertainty would be higher, trade would be weaker and financing conditions would deteriorate further. In this very challenging situation, I would like to highlight one positive aspect of the euro area economy: the labour market remains robust. According to the latest statistics  3  published,5 the euro area seasonally-adjusted unemployment rate was 6.6% in August 2022, well below the 7.5% recorded in August 2021.
BIS central bankers’ speeches  1