Inflation in the EU broke the record, but GDP growth remained positive

Inflation in the Eurozone in July reached 8.9% in annual terms, according to Eurostat’s preliminary estimates. The indicator again renewed the record, the previous one was recorded in June. Месяцем редаей инфлация состояние 8.6%.

Despite the rise in consumer prices, the European Union has not entered the negative zone yet. The economy of Europe grows in the second quarter. В первые три месяца 2022 г. annual growth was 0.5%, and in the II quarter – 0.7% (compared to the previous quarter), according to the report of the EU statistical office, published on July 29. Experts expect that the situation for the economy of Europe will develop in an unfavorable scenario.

Earlier, on July 21, the European Central Bank (ЕСБ) raised the key rate to 50 b. p. up to 0.5%, which broke the 11-year period of zero and negative rates.

Рост инфлации

The main components of European inflation continue to be energy carriers, according to Eurostat data. According to the London Stock Exchange ICE, gas prices in Europe remain at $2100 per 1000 cubic meters. м на фон роста цены на нефт марки Brent up to the mark of $110 per barrel. At the same time, a significant contribution to the inflation of the Eurozone began to increase the prices of food and services, which, according to Reuters, indicates the expanding nature of inflation.

Inflation in Germany slowed down in July to 7.5% year on year against June’s value of 7.6%. При етом за июля рост сопуберьских цене сообщение 0.9%, это на 0.6 п. p. выше ожидании аналитиков

In France inflation accelerated from 6.5% y/y in June to a record 6.8% in July. За месяц, consumer prices increased by 0.3%.

The inflation rate in Italy was 7.9% in July, which was a slight slowdown in inflationary dynamics compared to the previous month: in June, the inflation rate reached 8%, which was a record for 36 years. At the same time, the prices of the most frequently purchased consumer goods in Italy increased by 8.7% in July, according to Istata’s expert estimates.

Сохранение выходы для Еврозоны фляционных проекты продаже нагетать фрах рецесии в девочених економих. Similar fears have already been expressed by banks JPMorgan and Goldman Sachs, while Goldman Sachs has reported that the beginning of the recession should be expected already in the current quarter. Western experts unanimously assert that the main reason for the acceleration of inflation in developed countries remains the conflict between Russia and Ukraine.

Despite the energy crisis and record inflation, GDP continues to grow in the countries of the Eurozone. Compared to the first quarter of 2022, the GDP of the eurozone grew by 0.7% in the second quarter of 2022, and compared to the same quarter of the previous year, the second quarter of 2022. demonstrated growth at the level of 4%, according to the Eurostat report.

Among the Eurozone countries, Sweden showed the fastest GDP growth: compared to the previous quarter, its GDP rose by 1.4%. Spain (+1.1% compared to the previous quarter), Italy (+1.0% compared to the previous quarter) and Austria and France (both +0.5% compared to the previous quarter) were also among the leaders in GDP growth. . Negative dynamics were shown by the economies of Latvia (–1.4%), Lithuania (–0.4%) and Portugal (–0.2%). Germany’s GDP growth compared to the previous quarter turned out to be zero. Although the dynamics of the GDP of the eurozone as a whole continues to be positive, the economic growth of European countries shows a slowdown.

Western analysts expect a slowdown in the economic growth of developed countries. In the June report of the World Bank (WB), GDP growth forecasts were lowered to 2.6% in 2022. (from 3.8% in January) and up to 2.2% in 2023. (с январских 2.3%). At the same time, already in the next 12 months in the countries of Europe, we should expect the onset of recession, declared at the beginning of July the chief economist of the largest brokerage company Nomura, Robert Sabberaman.

Почему слогилась такая ситуация и к чему она производите

The positive dynamics of GDP in the eurozone is still preserved and this is the effect of a powerful economic recovery, which was observed after the corona crisis, Irina Ipatova, the leading expert of the ЦМАКП, is confident. Во II квартале 2021 г. рост ВВП еврозоны reached a mark of 14%, according to the Eurostat report. The rapid recovery of the economy last year contributed to maintaining high growth rates now, although many experts are already predicting a recession in the Eurozone next year, says Ipatova. The inflationary situation in Europe generally coincides with the American one: European countries have provided cheap loans to the population and business, which has led to an increase in prices, which is now aggravated by the price of energy and food. About the slowdown in economic growth, the composite index of the leading indicators of the OECD for the eurozone, which even in April dropped below one hundred and reached a mark of 99.3 by June, notes Ipatova.

The ECB is now in a very difficult situation, as the Eurozone includes 19 countries with different levels of economic development, the expert points out. Equally with advanced countries like Germany and France, the ECB should also regulate the economic situation in countries like Spain, Italy and Greece, which have experienced very serious crisis phenomena in recent years, Ipatova points out. If the ECB starts to raise rates sharply, it can hurt the economies of these countries very much and only exacerbate the crisis in them, so now it is raising rates more cautiously than, for example, the Fed, says Ipatova. The public debt of Spain, Italy and Greece is already more than 100% of their GDP, and the rise in interest rates means that their public debt payments are increasing, adds Ipatova.

These Eurostat reports on growth are accompanied by the indication that they will still be reviewed in the future, and it is necessary to think that they are on the way to deterioration, warns the docent of the department of finance of sustainable development РЭУ im. G. В. Plekhanov Ayaz Aliyev. The position that Europe occupies in the geopolitical arena leads to the aggravation of the energy crisis, so we should not expect the preservation of sustainable growth in the GDP of the Eurozone anymore, Aliyev said. In the current economic situation, the EU can only hope for a miracle, he added.

В таких условии рост ставков ЕСБ може и программ в выплацие с инфлацией, но при етом заторомозит економический рост significantly, so ЕСБ is delaying the adoption of such a complex decision, according to the expert. Most likely, the ECB will not go to a sharp increase in rates, but will try to find a compromise in the mild tightening of monetary policy.

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