Moscow plans to seize foreign companies that withdraw from Russia

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Jhe ECB has given us a taste of the economic fallout from the war in Ukraine – and it’s not looking good.

The central bank raised its inflation projections but cut its growth outlook as the conflict is expected to keep commodity prices high, undermining household purchasing power and business investment capacity.

The ECB now expects inflation to more than double its 2% target this year, with price growth also remaining above its target next year.

President Christine Lagarde said inflation was pegged at 5.1% on average this year – above the 3.2% forecast in December. In 2023, it is expected to fall back to 2.1%, although this figure is still higher than the previous forecast of 1.8%

GDP growth for this year is now forecast at 3.7%, down from 4.2% previously.

Ms Lagarde said Russia’s invasion of Ukraine “will have a significant impact on economic activity and inflation through rising energy and commodity prices, disruption of international trade and lower confidence.

She added: “The extent of these effects will depend on the evolution of the conflict, the impact of current sanctions and possible additional measures.”

However, the ECB “considers that it is increasingly likely that inflation will stabilize at its 2% target over the medium term”.

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