Oil inflation could reduce Eurozone GDP by 1.5% – Study
Raging inflation, led by surging oil prices, could reduce Eurozone’s gross domestic product (GDP) by 1.5%, according to a new study presented by economist Hilde C. Bjornland on Tuesday at the annual European Central Bank (ECB) Forum held in Sintra.
Key findings
“The increase in energy prices is directly related to geopolitical tensions, and disruptions to supply chains caused by the war in Ukraine.”
“On average, every 10 percent increase in oil prices can reduce eurozone GDP by 0.5 percent after two years, the study shows. This means that projecting 30 percent oil inflation could reduce GDP in the eurozone by 1.5 percent.”
"During periods of high oil price volatility, stabilizing inflation is difficult."
“The rise in other commodity prices, in particular of foods, has already raised inflation expectations and "has the potential to have lasting effects on prices.”
Related reads
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.
