“Euro area growth is expected to be hit further by Russian gas worries, with the biggest contractions expected in Germany and Italy,” Credit Suisse economists noted, adding that they think gas rationing may still be avoided.

Key quotes

"We expect the sharpest contractions in Germany and Italy – i.e. countries with large manufacturing sectors that are highly reliant on Russian gas, and in the case of Italy, also due to domestic political stress.”

"And in any case – even if rationing is avoided – the surge in gas prices driven by supply uncertainty will depress activity further.”

“Expect two 50 bps rate hikes in September and October, followed by increases of 25bps in December and February.”

"We expect the ECB to stay hawkish in the near term due to high inflation, but reach the end of the hiking cycle sooner than previously expected.”