Russia has been coping with various sanctions for several years already. This year, the Europeans have finally understood why Russia calls these restrictions useful. On the one hand, all the restrictive measures imposed against Russia have affected its economic situation. On the other hand, they unveiled the most vulnerable sectors of the European economy and turned into serious risks for Europe itself. A rise in fuel and energy prices is one of the biggest risks that Europe has faced.
The West was well aware of the possible consequences of the sanctions imposed on Russia. However, every country has faced different problems. While the US was ready for a shortage of fuel and easily found alternative sources of supply, European countries found themselves in a more alarming situation.
"Europe is at greater risk than the United States from surging oil prices making it harder to escape low growth and high inflation," the OECD's chief economist, Clare Lombardelli, said.
She supposes that a further increase in fuel prices will slow down GDP growth and boost inflation. "The 25% rise in oil prices since May is also already feeding through to consumer prices in some countries in a way that is "obviously unwelcome," Lombardelli said.
The above-mentioned factors will surely lead to higher household spending and lower consumer activity in the eurozone. "It depends very much on the extent to which countries are exposed to the oil price, and that depends on their relative position as an importer or an exporter," she explained. That is why analysts at the OECD revised their forecasts for the GDP growth rate in the United States and the EU. While in the US, the economy may expand by 2.2% by the end of 2023, in the eurozone, GDP is likely to rise by just 0.6%.