Economic impact on Asia and Africa because of increase in cost of living
The economic situation is far more serious than what official numbers suggest. Tough austerity measures, including increase in fuel prices, may well be on their way. The crisis shows through stagnation in real wages, growing household indebtedness, and lack of momentum in job-creating private investment. All this has a direct impact on India’s economy, particularly in relation to crude oil dependence and disrupted supply chains, media report. India’s prime minister Modi said that the world is passing through multiple overlapping crises. In the same time, IMF warns that Middle East war will slow down economic growth in Africa as cost of living soars.
| February 27th | May 12th | |
| Brent crude oil | 71,32 US$ | 106,85 US$ |
| Gas (TTF 1 month) | 31,51 € | 47,43 € (June) |
Oil and gas prices regressed a little bit on high level.
Cost increase expected for
- Fertilizer
- Plastic products
- Rubber
- Aluminum
- Helium
- Sulphur
- Computer chips
- Wheat
- Fruits and vegetables
- Air fares
ECB expects the macroeconomic backdrop today more benign than in 2022. They have created two scenarios (Source):
- Adverse scenario: assumes that the shock intensifies but its duration is relatively short, containing its propagation through the economy. Relative to the baseline, annual inflation moves almost one percentage point higher this year but falls back steeply by 2028, as indirect and second-round effects are outweighed by a large energy-related base effect. Growth would be somewhat lower in 2026 and 2027, before recovering in 2028.
- Severe scenario: assumes greater intensity, longer duration and broader, more persistent propagation. Relative to the baseline, annual inflation would be significantly higher across the horizon – by almost three percentage points in 2027 – and would not return to target within the projection period. Growth would be notably weaker in 2026 and 2027, by almost one percentage point cumulatively, before rebounding in 2028.
See also the BMBC article: The Strait of Hormuz Crisis: What Companies Must Do Now and what it means for Belgium and North Macedonia
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