Eurozone GDP could contract by around 0.8% in the medium term due to oil price increases, the European Central Bank said.
“This is a somewhat limited shock, which should be seen in the context of cumulative growth in potential output, which is estimated by the Commission to be around 5.2% over the next four years,” the ECB said in a statement. pre-publication of its financial report.
The forecast assumes a permanent oil price shock of around 40%, economists say.
Eurozone economies have grown despite continued negative effects from the pandemic and the fallout from Russia’s invasion of Ukraine, which has driven energy prices higher across the continent.
Despite the growing uncertainty, for now the current rise in the cost of oil is smaller than the crises of 1973 and 1979 and of a smaller magnitude than the rise seen in the period 2003-2008, ECB economists say.
The reduced impact of these energy shocks could be linked to more flexible labor markets, improved monetary policy and the fact that economies are less use-intensive than in the past.
Source: Capital
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