Ukraine’s conflict worsens Europe’s outlook

Economic activity is expected to slow EA growth in the euro area in the short term, as Russia’s invasion of Ukraine will affect economic activity, especially through weak confidence and rising inflation.

DBRS Morningstar Macroeconomic update Consumer confidence fell to its lowest level since May 2020 in March. This may reflect concerns about the impact of rising energy prices on households.

Rating agencies added that the conflict further contributed to existing supply shortages and further disrupted trade through import and export bans and economic sanctions.

“Ukraine’s conflict is affecting the European economy by weakening emotions, increasing inflation and exacerbating existing bottlenecks. Higher inflation Adriana Alvarado, Senior Vice President of DBRS Morningstar’s Global Sovereign Rating Group, said:

Price pressures resulting from soaring energy prices and supply shortages are intensifying and are expected to last longer than previously expected. This is especially true when Europe is trying to pull Russian gas apart. Ukrainian conflict continue.

“The downside risks to EA’s economic outlook could emerge from rising geopolitical risks, such as the disruption in gas supply from Russia and new pandemic-related regulations.

“DBRS Morningstar lookFurther deterioration in self-confidence and additional inflationary pressures, especially coupled with long-term gas turmoil and oil embargoes, can lead to a recession by squeezing consumption, which has underpinned a demand-driven recovery to date. “

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