The crisis is testing our solidarity, as well as other values and once more the resilience of many countries, Investment Strategists Maritza Cabezas and Joeri de Wilde write in their analysis of the war in Ukraine. Looking beyond the current and ongoing tragedy, they describe how Europe, in general, will be affected directly and indirectly through several channels, given the strong links with Russia and Ukraine. It will be hard to regain the stability in the region given the impact on confidence and social cohesion.
Their main conclusions:
- The economic outlook will deteriorate, and especially lower-income households are likely to suffer from the war-induced prolonged period of elevated inflation.
- Russia’s invasion of Ukraine will likely complicate the upcoming decisions on the pace of monetary tightening by the Fed and the ECB.
- Risk-off sentiment and uncertainty about the extent of the war will lead to elevated levels of volatility and a continuation of a flight to safety.
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