Russia’s war economy

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Ukraine – Reconstruction needs to start now. The priority will be investment in infrastructure, health services, housing and schools, as well as digital and energy resilience. We believe that this will require at least EUR100-150bn of private investment (in addition to EUR350bn of foreign aid).

Global energy markets – Fossil fuels remain expensive amid global trade reshuffling. Oil and gas prices dropped over the last months, but constrained supply and resilient demand will keep oil prices at USD92/bbl in Europe in 2023. Natural gas prices will be at 75 EUR/MWh on average.

Eurozone – energy inflation, quo vadis? Overall inflation will remain uncomfortably high, but energy inflation will drop precipitously during the coming quarters (due to strong disinflationary base effects), contributing less than 10% of overall inflation this year.