The euro area will mitigate the impact of the Russia-Ukraine conflict on its economy by closely monitoring the situation and promptly adjusting its fiscal policy if needed, officials said on Monday evening after a meeting of the Eurogroup.

"The key element is that given uncertainties and risks, we need to remain agile and flexible in our policy response; and the Eurogroup will work closely with the Commission in the coming weeks and months to do this," Eurogroup President Paschal Donohoe said. 

The Eurogroup, an informal gathering of the finance ministers of the Euro area, was meeting to issue budgetary guidance for 2023 for countries in the area.

"Transitioning from an aggregate supportive fiscal stance in the euro area to a broadly neutral aggregate fiscal stance next year appears to be appropriate while standing ready to react to the evolving economic situation, also in view of the high level of uncertainty," read the statement issued at the end of the meeting.

As the European economy was well into its recovery from two years of COVID-19 pandemic, it was strong enough to take in the first impacts of the Russia-Ukraine conflict. However, the true cost of the conflict remains to be seen, so a close monitoring of the situation should allow the Eurogroup to react and adjust to any evolution.

"It is too soon to have a clear measure of the quantity of this impact. It is clear that our winter forecast that were projecting a 4 percent growth for this year looks now overly optimistic," European Commissioner for Economy Paolo Gentiloni said. 

The gross domestic product will be affected through several channels, he explained, such as higher prices of commodities like gas, oil and wheat, or supply disruptions. The confidence of financial markets is also affected by uncertainty, according to Gentiloni.

"The fiscal guidance agreed by the Eurogroup today will be contingent on the development of the economic situation," read the Eurogroup statement.