August 19, 2022

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The European Central Bank casts a shadow over the Eurozone's growth prospects

The European Central Bank casts a shadow over the Eurozone’s growth prospects

bleaker prospects. European Central Bank (European Central Bank) casts a shadow on the pace of the economy in the future second half of the year In its latest monthly economic bulletin. “The inflation It remains undesirably high and is expected to remain above the Governing Council target [del BCE] For some time. The latest data indicates slowdown in growthovershadows expectations for the second half of 2022 and beyond.

Entity that submitted a request at the July meeting 0.50 point interest rate hikeafter he announced that it would be another 0.25 and a de-escalation mechanism risk premiums Of the countries’ debt, it affects the effect of the general rise in prices, which in Spain reached 10.8% in July, at the level of 38, and 8.6% in June in the eurozone.

In Spain, where food weighs more than the average European in the shopping cart, prices have skyrocketed. An example is oil, which rose in a year and a half by more than 56%, cereals became more expensive by 17%, dairy and eggs, 16%, and meat, 10% during the same period, above the European average according to a study by the Bank of Spain on The effect of higher food raw materials on final prices.

The report asserts thatEurozone economic activity is slowing down.” And that “Russia’s unjustified aggression against Ukraine is… Constant burden of growth. In this sense, it highlights the suppression of growth assumed by rising inflation, as well as “continued Supply Constraints and Increased UncertaintyAnd warns of the continued confrontation of companies Rising costs and disruptions in your supply chainsalthough there are signs of easing some supply bottlenecks.

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Throughout the second and third quarters, however, economic activity continued to benefit from the reopening of the economy, which was mainly supported by Services sector; Strong job market and support financial policy. “When people start traveling again, it’s expected to be the landmarks of the city Help the economy in the third quarter of this year. Consumption is supported by the savings that families have accumulated during the pandemic and by a strong labor market.”

In turn, fiscal policy helps mitigate the impact of the war in Ukraine on those who are Hardest hit by rising energy prices. In any case, temporary and specific measures must be put in place to reduce the risks of fueling inflationary pressures.”

low industrial growth

In June, the Purchasing Managers’ Index (PMI) of Factory production It indicated a contraction for the first time since June 2020, dropping below 50. This indicated weak activity in the manufacturing sector, particularly due to severe disruptions in the supply chain, higher commodity prices as a result of the Russian invasion of Ukraine and increasing general uncertainty.

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In addition, new manufacturing PMI orders continued to decline in June, while the supplier lead-time PMI showed that while supply bottlenecks remained steady in June, they eased somewhat. In contrast, the activity in Services sector It recovered in the second quarter of 2022 and is expected to get stronger in the third quarter.

The European Commission’s Economic Sentiment Index (ESI) fell slightly in June, which indicates this Growth slowed in the second quarter. While business confidence improved somewhat in manufacturing and services, it deteriorated in the retail and construction sectors. Reflecting persistent concerns about rising inflation amid heightened uncertainty and severe disruptions in the supply chain, Consumer confidence fell further in July to a level lower than the level recorded at the beginning of the Corona virus crisis.

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