The consequences of the war in Ukraine are proving devastating for the global economy. In the Eurozone, inflation continued to climb in April, growth is starting to show signs of flagging, and the United States has seen the first setback since Covid. In any case, in the whole of the zone, this growth is declining. This observation on the European economy has a very great impact on Algeria, which is a major importer of goods from this area.
Thus, according to Eurostat, growth was only 0.2% on average in the 19 countries of the euro zone, and therefore it is down 0.1 point compared to the previous three months against the backdrop of the pandemic and of war in Ukraine. Growth which reached 0.3% for the 19 countries sharing the single currency from October to December. For the European Union as a whole, GDP grew by 0.4% in the first quarter, after 0.5% in the last three months of 2021, according to preliminary estimates from the European statistics office.
This very weak growth is the result of the still present effects of the Covid-19 pandemic on activity, in particular due to the new Omicron variant, which combined with those caused by the international crisis linked to the Russian invasion of Ukraine. As for the inflation rate in the euro zone, it remains very high. It is maintained at a record level in April, at 7.5% over one year, announced Eurostat. These figures are the highest recorded by the European statistics office since the publication of this indicator began in January 1997. Inflation has broken a new record every month since November.
Inflation in the Eurozone: Impact on Algeria
The explosion of the inflation rate in the euro zone has a definite impact on Algeria. Indeed, being part of a global economic system, Algeria is bearing the brunt of this crisis which has been accentuated by the war in Ukraine. In addition, the Algerian economy, which is rentier and almost dependent on hydrocarbons, even if it is favored by the explosion in the price of hydrocarbons, is hard hit by inflation in Europe.
The rise in food prices in Europe has a direct impact on the country, especially since the latter is a major importer of basic necessities. Algeria will therefore buy more expensive products and resell them more expensive. This will further erode the already very low purchasing power of Algerian households. Algeria will be impacted by inflation in Europe because this continent is also one of Algeria’s most important suppliers of finished and semi-finished products and also of certain raw materials. So we can expect further price increases and inflation that will break new records in Algeria.