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7/7, 11:23 AM (Source: TeleTrader)
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EU economy to rebound faster than expected - forecast

The European Union's economy is forecast to rebound faster than previously expected, according to the Summer 2021 interim Economic Forecast released by the EU on Wednesday. The improvement in projections is due to better-than-expected first-quarter activity as well as the easing of coronavirus restrictions in the second quarter.

The economy in the EU and the euro area is set to expand by 4.8% this year and 4.5% in 2022, the forecast said, increasing by 0.6 and 0.5 percentage points respectively for 2021, and 0.1 in both areas for 2022. Real GDP is projected to return to its pre‑crisis level in the last quarter of 2021 in both the EU and the euro area. For the euro area, this is one quarter earlier than expected in the Spring Forecast.

The inflation expectations were revised higher, with a 2.2% average for 2021 in the EU, up 0.3 percentage points from the previous forecast, and 1.6% in 2022, rising 0.1 percentage points. For the euro area, inflation should reach 1.9% this year, up 0.2 percentage points, and 1.4% in 2022, 0.1 percentage points higher than previously expected.

"Uncertainty and risks surrounding the growth outlook are high, but remain overall balanced," the document noted. "Inflation may turn out higher than forecast, if supply constraints are more persistent and price pressures are passed on to consumer prices more strongly."

Breaking the News / DJ