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Global Economy

OECD: Inflation and war are depressing the economy, especially in Europe

The OECD (Organization for Economic Co-operation and Development, Paris) warns that Europe's economy is slowing down. The reasons: inflation and war in Ukraine weigh on expectations in the manufacturing sector.


Bank of England Governor Andrew Bailey also warned last week that the UK economy could be headed for recession as high inflation erodes real incomes and dampens consumer spending.

According to the Eurostat statistics office and the Swiss Federal Statistical Office, Europe fluctuated between inflation rates of 2.5 percent in Switzerland and 19 percent in Estonia in April.

The annual inflation rates were also in the double digits in Lithuania, Latvia, the Netherlands and Slovakia. Germany and Austria landed in the middle with 7.8 and 7.2 percent.

Italy, Finland and France remained below 7 percent. But in France, too, inflation is likely to accelerate further in the coming months, according to the statistics office INSEE, and this will weigh on household confidence and purchasing power.

According to Eurostat, energy in particular became more expensive in the euro zone – it cost a whopping 38 percent more than a year ago. Food and beverages (6.4%), industrial goods (3.8%) and services (3.3%) remained below the general price increase of 7.5 percent.


At the same time, the OECD's composite leading indicators (CLI) pointed to continued robust growth in Canada, Japan and the United States. Stable growth is also expected in most of the large emerging markets, particularly in China (industrial sector) and India.

Non-OECD member Russia is slightly below the OECD average, especially in terms of consumer confidence index (CCI). Business Confidence Index BCI and Composite Leading Indicators (CLI) outperformed OECD values in April.

see below with AFP, dpa

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