Research Briefing | Apr 4, 2022

Eurozone: Post-invasion reality: higher inflation, higher uncertainty

Eurozone Post-invasion reality: higher inflation, higher uncertaintySurvey data this week offer a glimpse into the European economy’s post-invasion reality. The Economic Sentiment Index (ESI) reading for the eurozone fell to a 12-month low, driven by dips in consumer confidence and industrial sector sentiment. Moreover, the final manufacturing PMI published today confirmed that the tailwinds coming from the removal of Covid restrictions will be met by extremely strong gusts coming from the war. The headwinds from the conflict are expected to last through 2022, impacting the recovery in industrial activity.

What you will learn:

  • This week, data confirmed that Europe faces a strong inflationary and sentiment shock, as a consequence of the conflict in Ukraine.
  • Further complicating matters, at 7.5%, March eurozone inflation reached an historic high.
  • Moreover, it’s not yet clear which financial scheme will be applied to Putin’s demand to have gas paid in rouble.

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