ukraine in late february this year. overall, in 2022 q1, gdp in spain was still 3. 3 pp below its prepandemic level, while in the euro area it stood 0. 5 pp above its pre - crisis mark. according to our latest projections, published last june, in the absence of any new shocks or an escalation of the war in ukraine, the spanish economy is projected to follow a gradual recovery path – one that could reach pre - pandemic gdp levels in the final stretch of 2023. that said, these projections are surrounded by extraordinarily high uncertainty, in particular related to developments in the war in ukraine. some of these uncertainties are already having a negative impact on the world economy and have the potential to affect significantly growth prospects. as an illustration, a hypothetical interruption of energy commodity imports from russia would hit the european and spanish economy hard. indeed, simulations prepared by banco de espana staff show that such a scenario would have a negative impact of between 0. 8 % and 1. 4 % on spanish gdp in the first year, depending on the assumption made regarding the european economies ’ ability to replace russian energy sources. in this uncertain scenario, one of the main worrisome developments is being the significant increase in the rate of inflation at the world, european and spanish level. in particular, inflation in spain rose significantly in 2021 and accelerated further in early 2022, reaching 10 % in june. moreover, although the price rises were initially concentrated in commodities and food and seemed to be relatively temporary in nature, in recent quarters their intensity has systematically surprised on the upside, spreading to the rest of the goods and services in the consumption basket and showing signs of greater persistence. therefore, analysing the current inflationary episode, with a particular focus on the factors that may influence the persistence of these dynamics in the future is of paramount importance for the recovery of the spanish economy. wage and mark - up dynamics are particularly relevant in this regard. in this regard, it should be emphasized that our projections on inflation, which currently anticipate that it will remain high in the coming months, but will moderate gradually thereafter to levels compatible with the ecb ’ s mediumterm inflation target of 2 % is based on the assumption that there will be a slowdown in the growth of energy prices, in line with those on the futures markets, and that a moderate wage growth response and a squeezing of trade margins will prevent the emergence of the price

future. this expectation largely reflects a natural gas industry in north america that is already operating at close to capacity and our inability to import large quantities of far cheaper, liquefied natural gas ( lng ) from other parts of the world. at present, natural gas supplies appear to be sufficient to meet the near - term demands - - even with some ongoing shortfall in gulf production. however, a colder - than - average winter would stress this market, and prices will likely remain vulnerable to spikes until the spring. u. s. imports of lng have been constrained by inadequate global capacity for liquefaction, as well as by environmental and safety concerns that have restricted the construction of new lng import terminals in the united states. in 2002, such imports accounted for only 1 percent of us gas consumption. despite the major effort to expand imports, the department of energy forecasts lng imports this year at only 3 percent of gas consumption. canada, which has recently supplied one - sixth of our consumption, cannot expand its pipeline exports significantly in the near term, in part because of the role that canadian natural gas plays in supporting increasing oil production from tar sands. the disruptions to energy production have noticeably affected economic activity. we estimate that the storms held down the increase in industrial production 0. 4 percentage point in august and an additional 1. 7 percentage point in september. except for the hurricane effects, readings on the economy indicate a continued solid expansion of aggregate demand and production. if allowance is taken for the effects of katrina and rita and for the now - settled machinist strike at boeing, industrial production rose at an annual rate of 5 - 1 / 4 percent in the third quarter. that's up from an annual pace of 1 - 1 / 4 percent in the second quarter, when a marked slowing of inventory accumulation was a restraining influence on growth. the september employment report showed a loss of 35, 000 jobs. however, an upward revision to payroll gains over the summer indicated a stronger underlying pace of hiring before the storms than had been previously estimated. the bureau of labor statistics estimates that employment growth in areas not affected by the storms was in line with the average pace over the twelve months ending in august. retail spending eased off in september, likely reflecting the effects of the hurricanes and higher gasoline prices. major chain stores report a gradual recovery over october in the pace of spending, though light motor vehicle sales declined sharply last month, when some major incentives to purchase expired. the longer -