Prof. ST Hsieh
Director, US-China Energy Industry Forum
April 30, 2022
Is the headline surprising? Of course not. Surely, Ukraine war has been wrecking her economy and decimating her population and landscape, but it also damages the economy of EU nations. The Q1 numbers of just quantifies these damages. It is not too bad yet!
Note the Ukraine war started on February 24th, so the Q1 statistics only covered the war impact of March, one month. With all the arms, from Russia as well as from the Wets, flowing into Ukraine, we can expect that the Q2 (covers April, May, and June) will be devastating. Especially, if US technically gets into recession by July. There would be nothing to celebrate the 4th of July in the US. There is no winner of war.
UPDATE 1-German economy grew slightly in Q1, but Ukraine impact growing
April 29, 2022, 1:36 AM·2 min read
BERLIN, April 29 (Reuters) – The German economy grew slightly in the first quarter of this year, supported by stronger investment, but the war in Ukraine began having an increasing impact from the end of February, the Federal Statistics Office said on Friday.
Europe’s largest economy grew by 0.2% on the quarter in adjusted terms, the office said, adding that net exports had slowed growth. A Reuters poll had pointed to growth of 0.1%.
“The economic consequences of the war in Ukraine have had a growing impact on the short-term economic development since late February,” the office added in a statement.
The German government on Wednesday cut its growth forecast for 2022 to 2.2% from 3.6% projected in January as Russia’s invasion of Ukraine, sanctions and high energy prices take a toll on output. It also raised its 2022 inflation forecast to 6.1%.
Economy Minister Robert Habeck said the reduced growth forecast did not assume a Russian energy embargo or blockade and that the economy would tip into recession if either of those transpired.
First-quarter GDP figures for the wider euro zone, where Germany’s is the biggest of 19 economies, are due later on Friday.
Commerzbank economist Joerg Kraemer said companies and consumers were unsettled: “If Russian gas supplies were halted, the energy crisis triggered by this would probably cause a deep recession. The economic risks are very high at the moment.”
A survey released on Wednesday showed German consumer morale is projected to plunge to a historic low in May as the war in Ukraine leads to soaring costs for households and dashes hopes of a post-pandemic recovery.
German chemicals group BASF reaffirmed its 2022 profit forecast on Friday, as its passes along soaring raw materials costs to its industrial customers, but warned that conditions globally were uncertain.
“The market environment continues to be dominated by an exceptionally high level of uncertainty,” the company said.
(Writing by Paul Carrel, Editing by Miranda Murray and Catherine Evans)
Eurozone Economy Grew 0.2% in 1Q; France Stagnates, Germany Avoids Recession
Thu, April 28, 2022, 10:21 PM
By Geoffrey Smith
Investing.com — The Eurozone economy grew by 0.2% in the first three months of the year, but its post-pandemic growth weakened sharply toward the end of the period under pressure from the war in Ukraine and record-high inflation.
Eurostat’s figures, released on Friday, mean that gross domestic product was up 5.0% from a year earlier, a time when the region’s economy was still laboring under the worst of the effects from the pandemic.
Both figures were largely in line with expectations, but masked some big divergences from consensus among some of the region’s biggest member states. French GDP undershot expectations to stagnate in the quarter, while German GDP rose 0.2%, defying fears that it would register a second straight quarter of negative growth, thanks to strong investment spending.
At the same time, Eurostat said that inflation in the Eurozone hit a new record high since the creation of the single currency. Consumer prices rose 7.5% in April, up from 7.4% in March. While the slower rise in the headline rate suggests that an absolute peak for inflation may be near, underlying price pressures remained strong: core CPI rose by over 1% for the second month running, and Eurostat’s harmonized measure of annual inflation excluding food and energy accelerated far more than forecast to 3.9% from 3.2% last month.
The euro rose by around half a cent against the dollar in the course of the morning as national GDP data were published in advance of the Eurozone numbers. By 5:20 AM ET (0920 GMT), it was at $1.0576, up 0.8% on the day. A bounce in Chinese assets in response to promises of more economic policy support from Beijing had also helped sentiment toward the euro and to risk assets more broadly.