The eurozone economy is trapped between war and epidemic
Slowing quarterly growth… and record inflation
Saturday – 29 Ramadan 1443 AH – 30 April 2022 AD Issue No. [
No sooner had the eurozone economy started to emerge from the Corona epidemic crisis than it found itself captive to the consequences of the Ukraine war (Reuters)
Cairo: Lamia Nabil
Economic growth of 0.2 percent in the euro zone slowed in the first quarter of the year compared to the previous quarter, while inflation remained at a record high in April amid the spread of the epidemic and the war in Ukraine.
Between October and December, GDP growth was 0.3 percent in the 19 countries that use the single currency. In the European Union as a whole, growth rose 0.4 percent in the first quarter, after 0.5 percent in the last three months of 2021, according to preliminary estimates by the European Statistical Office.
After three consecutive quarters of gains, the growth rate maintained a sharp one-year increase of 5 percent for the euro area and 5.2 percent for the European Union from the first quarter of 2021.
Among the major countries, Spain and Germany saw economic growth of 0.3 percent and 0.2 percent, respectively, during the first three months of the year, on a quarterly basis. France stagnated (0 percent) and Italy fell (-0.2 percent). The economy is facing difficulties, especially due to the high consumption prices, especially in the energy sector, due to the war in Ukraine.
The inflation rate in the euro area remained at an unprecedented level in April of 7.5 percent within one year, according to the statistics office, compared to an inflation rate of 7.4 percent during the month of March.
Eurostat explained that the increase in consumer prices is mainly due to the rise in energy costs, which reached 38% during the month of April, compared to the same month last year.
Energy prices are expected to remain high given the tensions between European countries and Russia over the war in Ukraine, and the European Union’s desire to reduce dependence on Russian oil and gas.
Eurostat indicated that the prices of food, alcoholic beverages and tobacco products continued to rise during the current month of April to record 6.4 percent, compared to an inflation rate of 5 percent in the month of March. Eurostat added that the cost of industrial goods not related to energy increased by 3.8 percent, compared to a rise of 3.4 percent in March. Eurostat noted that service costs jumped by 3.3 percent, compared to a rise of 2.7 percent in March.
The core inflation rate, which excludes the prices of energy, food, alcoholic beverages and tobacco products, rose at an accelerating pace to record 3.5 percent, compared to a core inflation rate of 2.9 percent during last March. According to Eurostat data, Estonia is the country most affected by the rise in consumer prices, with the inflation rate reaching 19 percent in the month of April.
In Germany, the economic locomotive of the eurozone and Europe’s largest economy, inflation in April reached its highest level in more than four decades, driven by prices of natural gas and mineral oil products that have risen sharply since Russia’s attack on Ukraine.
The Federal Statistics Office said Thursday that consumer prices rose 7.8 percent year on year, up from 7.6 percent in March. Data indicate that the last time inflation rates of such a rise were recorded in Germany was in the fall of 1981 due to the first Gulf War.