Ukrainian war, S&P: no to recession, but growth down to 3.3% against 4.4% in 2021
The dear energy surprises the growth estimates of the Old Continent. The European economiesnet importers of energy, are preparing for a slowdown as they rise oil prices he was born in gas in response to the Russia-Ukraine conflict. To give a complete photograph is S&P Global Ratings in a relationship. The purchasing power of households will weaken, with theinflation which should reach the 5% this year and stay above the 2% in 2023.
“Thanks to the strong momentum of the recovery and sufficient liquidity reserves, we don’t expect a year-round recessionbut rather a decline in the growth of the GDP at 3.3% this year compared to 4.4% previously, “he said Marion Amiot, S&P Global Ratings senior economist, in the report Economic Outlook Eurozone Q2 2022: Healthy But Facing Another Adverse Shock.
“L’uncertainty that surrounds ours forecasts it is higher than usual, with downside risks to growth for 2022 and upside risks for inflation this year and next. If the downside risks don’t materialize, let’s see the ECB in the position of raise rates in December, especially as inflationary pressures are set to last longer than before the Russian-Ukrainian conflict. However, we recognize that the window of possibility for a first rate hike would open in September. ”
“In a more rigid scenario, the downward effects on growth and upward effects on inflation can be amplified by: a oil price shock taller and longer. In our models, a 10% increase in the price of oil, which is nearly equivalent to a $ 10 per barrel increase now, raises consumer prices by 0.5% and lowers the GDP of 0.2% in time; net cuts in gas supply. As already mentioned, the ECB believes that a 10% cut in gas supply it could endanger about 0.7% of the euro zone’s GDP; stronger confidence effects that would lead families to save more, especially if wages fail to reachinflation. For now, the decline in consumer confidence is about half that of 2020, when the former were adopted Covid restrictions“.
S&P also cites “more acute problems in the supply chainsuch as punctual interruptions in production, especially in small and medium-sized enterprises, with the risk of knock-on effects, if substitutes for industrial and food raw materials imported from Russia prove difficult to find. ” in both the basic and severe scenarios, he sees “a rising inflation despite a weaker growth outlook as an argument for the ECB to start normalizing monetary policy this year, but without rushing “.
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