ECB puts oil hit to potential GDP at less than 1% over four years – Reuters
The European Central Bank (ECB) said in a statement on Monday, a sustained rise in oil prices will reduce the eurozone's potential output by less than 1% over four years, Reuters reports.
The reduction in the bloc’s output will account for a small hit that could be further reduced by the green transition, the ECB said.
Key takeaways
“Using its own forecasting model, the ECB found that an increase of 1% in oil prices would reduce the euro area's growth potential by around -0.02% in the medium term.”
“Assuming a 40% rise in oil prices in the next four years compared to 2017-20, the ECB concluded that potential output in the euro area would be cut by just 0.8% over that period.”
"In particular, for transportation and household energy consumption, viable green alternatives exist that are far less dependent on oil.”
Market reaction
EUR/USD was last seen trading up 0.40% at 1.0258, unperturbed by the above report.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
