Global Economic Weekly: Less oil dependent, but more price sensitive

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Global Economic Weekly: Less oil dependent, but more price sensitive

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Global Economic Weekly

Less oil dependent, but more price

sensitive

Global Letter: Less oil dependent, but more price sensitive 15 May 2026

Why are growth and inflation in Europe more sensitive to oil prices if the economy is Economics

less energy intensive? First, the US has become a net energy exporter in recent years, Global

while Europe maintains an energy trade deficit of about 2% of GDP. This implies a

negative terms of trade shock, whereas an energy shock could be more redistributive Table of Contents

than contractionary in the US. Second, energy expenditures (including taxes) in Europe

Global Letter 2

are double those in the US as a share of GDP, and the weight of energy in the Euro area

US 4

HICP is more than twice compared to US PCE.

Europe 7

UK 11US: The jury is still out

The economy is being buffeted by a plethora of supply and demand shocks. The tails of China 13

the economic and Fed policy distribution are fat. Inflation is clearly a problem. But are Emerging EMEA 15

we experiencing stagflation or reflation? Resilient spending and booming earnings point Latin America 17

to reflation. But with the fiscal tailwind fading, the true test of consumer and labor Key forecasts 20

resilience might still be ahead of us. The labor market would have to start tightening for Detailed forecasts 21

reflation and rate hikes to become our base case. Research Analysts 27

Europe: China–EU trade – Imbalance over tariff effects

Tariffs cut China's exports to the US sharply, but there is no clear evidence of diversion Claudio Irigoyen

Global Economist

towards the EU in aggregate. Strong EU imports from China pre-date tariffs. Evidence BofAS