The ratcheting-up of sanctions on Russia and the further surge in commodity prices this week mean we are revising down our euro-zone growth forecast for 2022. Exports to Russia will collapse while even higher inflation will weigh on consumer spending, which will only be partly offset by increased fiscal stimulus. We now expect growth of 2.8% this year. Against this worsening backdrop, the ECB is likely to stress at its meeting next week that it will tread carefully this year with its policy normalisation plans.
Drop-In (8 March, 10:00 EST/15:00 GMT): We’re discussing Russian energy imports and Europe’s energy needs in this special 20-minute briefing on one of the big sticking points in the western response to the war in Ukraine. Register here.
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