Italy’s growth set to slow on war in Ukraine; ECB does not see risk of stagflation — Macro Snapshot

RIYADH: While Spain and Italy’s growth forecasts show decline, the European Central Bank does not expect the war in Ukraine to push the euro zone into stagflation even if it does push up inflation due to higher energy prices and push down growth, President Christine Lagarde was quoted as saying on Saturday.

“Incoming data don’t point to a material risk of stagflation,” Lagarde said in an interview with Phileleftheros published by the ECB on its website.

Lagarde said growth in the euro area could be as low as 2.3 percent in a severe scenario due to the war in 2022, however, in all scenarios inflation is expected to decrease and settle at levels around the bank’s 2 percent target in 2024.

Moscow exchange to resume

The Russian central bank said on Saturday that the Moscow stock exchange will resume trading on Monday, with Russian shares and bonds in normal mode, albeit for half a day.

It said the trading session will last from 9:50 a.m. until 1:50 p.m. Moscow time (0650-1050 GMT).

The Russian market is gradually reopening and returning to normal after a suspension caused by sweeping Western sanctions that followed the beginning of what Russia calls “a special operation” in Ukraine on Feb. 24.

Iraqi crude 

Jordan and Iraq agreed to extend a memorandum of understanding signed between the two sides to import 10,000 barrels per day of Iraqi Kirkuk crude oil, Jordan’s state news agency reported on Saturday.

The oil will be transported to the Jordan Petroleum Refinery in Zarqa, it added.

Italy’s 2022 growth 

Geopolitical tensions stemming from the war in Ukraine will dampen Italy’s growth this year, ratings agency Scope said on Friday, echoing the views of other prominent observers.

The Russian-led invasion of Ukraine has inflated already sky-high energy prices, leading several think tanks to lower their forecasts for eurozone economies in 2022.

Scope Ratings analyst Giulia Branz told Reuters the group’s growth projection for Italy this year now stands at around 3 percent, falling from the 4-4.5 percent initially forecast at the beginning of the year.

Spain’s GDP 

The Spanish economy grew 5.1 percent in 2021, revised official data showed on Friday, slightly higher than a 5 percent preliminary estimate given in January but still well below the government’s 6.5 percent target.

Gross domestic product expanded at 2.2 percent in the fourth quarter from the previous one, the revised National Statistics Institute data showed, compared with a flash estimate of 2 percent.

The INE also revised quarterly GDP data for the third quarter to a 3.5 percent expansion from a previous projection of 3.4 percent growth.

Japan fuel subsidies 

Japan will extend its current fuel subsidies to cushion the impact of energy inflation on households and businesses to the end of April, Prime Minister Fumio Kishida said on Friday. 

Kishida told reporters he would order the government as early as next week to compile additional emergency countermeasures for rising prices of oil and other goods by the end of April.

Malaysia’s February CPI 

Malaysia’s consumer prices in February rose 2.2% from a year earlier, below forecast, government data showed.

February’s consumer price index was expected to rise 2.4 percent, according to 16 economists surveyed in a Reuters poll.