The European Central Bank (ECB) highlights the fact that the recent rise in energy prices represents a “significant supply shock”, which could have an impact on the potential output of the eurozone economy.
The institution says that a 1% rise in oil prices would imply a drop in the level of potential production in the euro zone of around 0.02%, in the medium term.
The conclusion is in a bulletin published this Monday (1st) by Julien Le Roux, Béla Szörfi and Marco Weissler.
The trio cites recent projections by the ECB itself, according to which oil prices in dollars between 2022 and 2024 should be 40% higher than in the period between 2017 and 2019, before the Covid-19 pandemic.
As a percentage, the shock is not as big as in 1973 and 1979, they compare.
As the current rise in energy prices, and oil in particular, reflects on supply-side factors, this could also affect potential production, with implications for inflationary pressures, economists point out.
The trio argues, however, that there is no empirical evidence that oil price shocks have a lasting effect on potential production.
At the current level of prices, the potential loss of production in the eurozone can be estimated in the medium term at 0.8%, economists calculate.
But they highlight the current great uncertainty, with potential changes in variables such as production technologies, viable green alternatives, among other points.
Source: CNN Brasil
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