Page 17 - Economic report 2020

in the previous year in Spain and Portugal. On
GDP GROWTH IN EUROZONE the other hand, it grew below the Eurozone
COUNTRIES. 2022 Chart 1.3 average in countries such as France (+2.5%) or
Annual variation rates, as %
Germany (+1.8%).

Inflation reached figures that
had not been seen in decades.

The inflation rates rebounded notably in 2022,
due to the outbreak of war in Ukraine, although
prices started to climb in early 2021. The origin
of this inflationary process can be explained
by the major rise in energy and commodity
prices, both basic foodstuffs (cereals, oil, meat,
etc.) and metals (iron, copper, aluminium,
nickel, etc.), although this later affected all
other products. On annual average, Eurozone
inflation was 8.4% in 2022, compared with
2.6% in the previous year. The underlying rate
of inflation (excluding volatile components such
Source: Eurostat.
as energy and unprocessed food) also saw a
strong increase (from 1.5% to 4.8%) and ended
up well above the European Central Bank (ECB) monetary policy target (2%). The main Eurozone
economies saw annual inflation rates that had not been seen in decades, including Italy (8.7%), 15
Germany (8.7%), Spain (8.3%) and France (5.9%).

To combat inflation, the central banks resolutely increased the nominal interest rates throughout
2022. The US Federal Reserve began its restrictive policy before the European Central Bank
(ECB). Between March 2022 and July 2023, the Federal Reserve made eleven rate rises, putting
them at 5.25-5.50%, the highest level in 22 years. The ECB made nine consecutive rises between
July 2022 and July 2023 and fixed the official
rate at 4.25%. At the same time, the ECB The central banks toughened
reduced its unconventional monetary policy. their monetary policy to combat
In March 2022, the Pandemic Emergency
Purchase Programme (PEPP) ended, a massive high inflation.

TREND IN EUROZONE HARMONISED CONSUMER PRICES - Interannual variation rate, in %
Chart 1.4 External environment of the Andorran economy | I. International economy

General inflation Underlying inflation
Source: Eurostat.