The Iran war is raising European industry costs at the fastest pace in 4 years

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The Iran war is raising European industry costs at the fastest pace in 4 years

Opinion polls, the results of which were released on Monday, showed that the economic shock resulting from the Iranian war affected European industry last month, leading to a decrease in demand for its products and an increase in costs. Raw materials at their fastest pace in 4 years.

The US-Israeli conflict with Iran, which began in late February, has disrupted trade, unsettled financial markets, and raised concerns about global energy supplies, especially through the Strait of Hormuz, which is a vital corridor for Oil and Gas.

The opinion polls issued today came after warnings from the heads of the International Energy Agency, the International Monetary Fund, the World Bank, and the World Trade Organization, that the war had caused a strain on global energy supplies.

Industrial contraction dominates the euro zone

The purchasing managers’ index for the euro zone, issued by "Standard & Poor’s Global" to 51.6 points in May, compared to the highest level in almost four years in April, which reached 52.2 points, but exceeded the initial estimate of 51.4 points.

In Germany, Europe’s largest economy, the manufacturing sector saw a recession, while French factories saw a contraction for the first time since November.

Official data, due for release on Tuesday, are expected to show that inflation has exceeded the European Central Bank of 2% last month.

British factories raised their prices at the fastest pace since June 2022 last month in response to a significant rise in costs.

Inflation fears drive monetary tightening

Chris Williamson, chief economist, said "Standard & Poor’s Global": "Although the euro zone’s manufacturing sector registered growth for the fourth straight month in May, it is showing signs of struggling under the weight of rising prices and supply chain disruptions caused by the war in the Middle East.".

According to the majority of economists surveyed "Reuters" Their views in May The European Central Bank will raise its deposit rate this month, and at least a second time this year, in an attempt to curb rising energy prices and their impact on core inflation.