Europe's Industrial Production Contracts Amid High Diesel Prices and Social Unrest
What happened
Eurozone industrial production contracted 1.1% year-over-year, according to a Eurostat report. Industrial production in Germany is nearly 10% below 2021 levels. This contraction is occurring amid social upheaval and exploding European diesel prices, which are approaching $200 per barrel.
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Why it matters
The rising diesel prices are increasing transportation costs across Europe’s industrial base. This economic strain is happening alongside widespread social unrest in Europe, which is driven by factors such as declining real wages and rising costs of living.
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Who's involved
- EuropeThe continent experiencing industrial contraction and social upheaval.
- euroThe currency facing downward pressure due to economic contraction.
- European Central BankThe central bank facing policy challenges from the stagflationary shock.
- BrentThe commodity whose prices are rising due to the energy shock.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- euroSpeculative
The euro could face sustained downward pressure on its value due to high inflation and economic contraction.
- European Central BankSpeculative
The European Central Bank may be forced into a difficult policy choice between managing inflation and preventing deindustrialization.
Possible ripples
Who this could reach next, traced step by step from the reporting. Possibilities worth considering, not forecasts.- ECB faces dilemma as European industrial contraction drives stagflationStagflationary shock forces ECB into difficult choice between inflation and deindustrializationLikely
- European industrial contraction may affect Brent crude pricesEuropean industrial contraction may put pressure on Brent crude prices.Possible
- Industrial contraction and social upheaval may force European Commission actionIndustrial contraction and social upheaval may force European Commission actionPossible
- Industrial contraction may put sustained downward pressure on the euroThe euro may face sustained downward pressure due to industrial contraction and rising costs.Possible
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The entities involved
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Europe
terrestrial continent located in north-western Eurasia