Economic growth gave way in the United States as the supply chain disruption weighed on economic activities. According to the Bureau of Economic Statistics (BEA), the United States economy shrunk by 1.4% q/q in Q1-22 (Q4-21: +6.9% q/q) – the first slowdown since the pandemic in Q2-20.
The negative GDP print was primarily due to the troika effects of (1) widening gap in the country’s trade deficit, (2) decline in inventory investment, and (3) fading government stimulus in the economy.
Accordingly, Gross Private Domestic Investment (2.3% q/q vs Q4-21: 36.7% q/q), Exports of goods and services (-5.3% q/q vs Q4-21: 6.4% q/q), and import of goods and services (17.7% q/q vs Q4-21: 17.9% q/q) sub-components. However, on a year-on-year basis, the economy grew by 3.6% y/y in Q1-22 (Q4-21: +5.5% y/y).
Analysts say the ongoing supply chain disruptions further exacerbated by elevated energy prices is expected to weigh on economic growth over the next quarter, we as improvement in GDP growth is expected in the medium term, given the improvement in consumer spending and job numbers.
Growth in the Euro Area slowed substantially in the first quarter of 2022 due to the Russia/Ukraine crisis that led to a spike in commodities prices. According to preliminary estimates from Eurostat, the Euro Area economy expanded by 0.2% q/q in Q1-22 (Q4-21: 0.3% q/q) – the slowest growth since the bloc exited economic recession in Q1-21.
The subdued growth reflects the dual impact of the (1) lingering supply chain disruptions and (2) persistent inflationary pressures due to the surge in energy prices induced by the tensions between Russian and Ukraine.
Notably, growth in Spain (+0.3% q/q) and Germany (+0.2% q/q) offset the contraction in Italy (-0.2% q/q). On a year-on-year basis, the euro area grew by 5.0% y/y in Q1-22 (Q4-21: 4.7% y/y).
