The conflict in Ukraine is heavily weighing on the global economy. Such event is reflected in macroeconomic indicators, skyrocketing inflation and downward pressure on GDP estimates. The International Monetary Fund (IMF) has revised down its global growth estimate for 2022 to 3.6% (from 4.4% as reported in their January’s World Economic Outlook).
Euro area inflation was 7.4% in March 2022, slightly lower than the initial estimate of 7.5%, but still at a record-high. Food and fuel prices rose due to war and supply bottlenecks. ECB members, Kazaks and Nagel, have taken on a hawkish tone after their comments. They stated they are in favor of raising interest rates in July. After Chair Powell hinted the possibility of a 50-basis point rate hike next month, European stocks fell Friday morning.
Positive news came from the euro area PMIs. Data published by IHS Markit showed that the preliminary euro area composite PMI increased to 55.8 in April, up from 54.9 in March and above the market forecast of 53.9. Manufacturing PMI decreased to 55.3, while the services PMI rose to 57.7 mainly due to a recovery in tourism and recreation activity.
Markets were little moved by the data release with all major European indices in the red. Euro against the US dollar trades just above 1.08.
