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Financial News: Eurozone Economic Growth To Moderate In 2022: EU

Eurozone Economic Growth To Moderate In 2022: EU

11/11/2021 - 06:55:00 (RTTNews)

(RTTNews) - Although the damage caused by the pandemic to the EU appears considerably less than feared, the economic growth is likely to moderate next year as the propelling forces of the re-opening are set to fade out amid loosening supply bottlenecks.

According to the latest Autumn economic forecast, the euro area GDP is projected to expand 5 percent this year, up from the prior outlook of 4.8 percent.

Meanwhile, the outlook for next year was lowered to 4.3 percent from 4.5 percent. In 2023, the currency bloc is forecast to expand 2.4 percent. The EU is also forecast to grow 5 percent in 2021 and 4.3 percent in 2022. Growth is projected to ease to 2.5 percent in 2023.

The EU said inflation in the euro area is set to peak at 3.7 percent in the last quarter of the year and continue recording high prints in the first half of 2022.

After reaching 2.4 percent in 2021, inflation is forecast to decline to 2.2 percent in 2022 and 1.4 percent in 2023, as energy prices are set to gradually level out as from the second half of next year and the imbalances between supply and demand solve.

The inflation forecast for this year and next year was upgraded notably from 1.9 percent and 1.4 percent, respectively.

As the economy expands, the labor market is forecast to complete its recovery next year. The jobless rate is expected to decline to 7.5 percent in 2022 and then to 7.3 percent in 2023.

The EU said Germany's economy is set to recover despite supply bottlenecks slowing down manufacturing and putting a lid on the rebound of exports and investment.

The real GDP is projected to rebound 2.7 percent in 2021 and 4.6 percent next year. In 2023, growth is set to ease to 1.7 percent, assuming a normalization of supply and demand dynamics.

Despite high input prices and disruptions in the global supply chains assumed to last until mid-2022, France growth is expected to remain solid next year and in 2023. The economy is projected to grow 6.5 percent this year, 3.8 percent in 2022 and 2.3 percent in 2023.

Spain's GDP is set to speed up in the second half of the year and achieve an annual growth rate of 4.6 percent in 2021, the EU said. Overall real GDP is projected to grow 5.5 percent in 2022 and 4.4 percent in 2023.

Italy's GDP is projected to rebound 6.2 percent this year, before growth moderates to 4.3 percent in 2022 and the economy returns to pre-crisis output levels by mid next year. In 2023, economic activity is set to expand 2.3 percent.

In the UK, the effects of supply shortages, higher unemployment and the increase in inflation are expected to ease over the forecast horizon. GDP is forecast to grow 6.9 percent in 2021. The growth is then expected to slow to 4.8 percent in 2022 and 1.7 percent in 2023.

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