Months pass and concerns about an economic slowdown in the euro zone due to the war on its doorstep are confirmed: the International Monetary Fund assessed this Tuesday, April 19 the cost at more than one point of GDP this year. The IMF now expects 2.8% growth in the euro zone countries, a serious slowdown after the 3.9% anticipated in its previous forecasts in January and the 4.3% still hoped for in those of October.
War in Ukraine: Inflation knocks on the door of the supermarket
“The main channels through which the war in Ukraine and the economic sanctions imposed on Russia affect the economy of the euro zone are the global increase in energy prices and energy security”writes the Washington institution in its spring economic forecasts published on Tuesday, and entitled “ War sets back global recovery ».
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Last month, the Organization for Economic Co-operation and Development (OECD) had already drawn up a similar observation, estimating that growth in the area would be cut by around 1.4 points and that inflation would increase by 2.5. points over a year if the effects of the war prove to be lasting.
Record European inflation
“The war in Ukraine severely affects the economy of the euro zone”, also acknowledged Thursday, April 14 the President of the European Central Bank, Christine Lagarde, pointing to a decline in confidence and the persistence of high energy costs in the daily life of households and businesses. The ECB also revised its optimism downwards last month, anticipating only 3.7% growth this year and a sharp rise in inflation.
Inflation: why the ECB is procrastinating
Nearly two months after the start of the conflict, the war in Ukraine maintains high pressure on prices: oil remains above 100 dollars per barrel after having approached its historic levels in March, a month in which gas, wheat, aluminum, nickel and other raw materials soared to record highs, driving European inflation to an all-time high of 7.5%.
Not all states will suffer in the same way from the economic shock of war, warns the IMF, however. Those with“a relatively large manufacturing sector and greater dependence on Russian energy” will suffer the heaviest effects, with Italy and Germany in the lead, to which Moscow delivers a lot of gas.
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Already weakened by the disruption of global production chains in the wake of the health crisis in 2021, Germany has seen its growth forecast for 2022 lowered to 2.1% by the IMF, a plunge of 1.7 points compared to its January forecast. Italy is expected to grow by 2.3%, a drop of 1.5 points.
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The IMF predicts a slight improvement for Germany in 2023 with 2.7% (+0.2 point), less good for Italy at 1.7% (-0.5 point) and for the euro zone in as a whole at 2.3% (-0.2 points). France will also suffer the blast effect of the war with a GDP up 2.9% this year, i.e. 0.6 points less than in the January forecasts, and 1.4% in 2023 (- 0.4 points).
Faced with the generalized global economic slowdown this year and next year, the Washington institution calls on the States to continue to support activity when they can. “While many states will need to consolidate their public finances, this should not prevent governments from providing targeted assistance to refugees displaced by the conflict, to households affected by rising food and fuel prices and to those affected by the pandemic”writes the IMF’s new chief economist, Pierre-Olivier Gourinchas.