Valdis Dombrovskis, the EU commissioner for the economy, told CNBC that the spring forecast, due to be published this week, predicts a downward revision of economic growth and an upward revision of inflation.
“We are dealing with a stagflation shock,” Dombrovskis said on Monday, on the sidelines of a meeting of G7 finance ministers in Paris.
Stagflation combines economic stagnation (lack of GDP growth or its decline) with high inflation.
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Fears of stagflation have increased in recent weeks. The conflict in the Middle East continues, and with the Strait of Hormuz closed, oil prices remain above $100. per barrel.
Limited room for maneuver
Dombrovskis added that policymakers' room for maneuver is now “more limited,” leaving little room for the broad-based fiscal response seen during the Covid pandemic.
“We believe it is important that the support measures we take are temporary and targeted, and not ones that maintain high demand for fossil fuels,” he added.
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Strategists warn that global oil supplies are falling rapidly and may not recover until December 2027, and physical shortages may appear in Europe by the end of that month.
The International Energy Agency (IEA) has warned in its latest monthly report that global oil supplies are being depleted at a record pace. “Rapidly shrinking buffers in the face of continued disruption could herald future price spikes,” the IEA said.
Oil price
Oil futures Brent they are more than 2% more expensive on Monday. up to $112 per barrel. In turn, oil WTI more expensive to $108. per barrel. Over the last three months, the price of oil has increased by approximately 60%.
Meanwhile, the US Treasury Department issued a license temporarily lifting sanctions on the purchase of Russian crude oil transported by sea. This is the third such case of American concessions since the outbreak of the war with Iran.
In addition, the US is considering temporarily lifting sanctions on Iranian oil, which is a key demand of Tehran. Despite such information, the oil market is still seeing growth.
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Source: CNBC, Business Insider Polska
