Covid-19

Eurozone growth forecasts cut due to coronavirus restrictions

Summary

EU Cuts Euro-Zone Economic Outlook Description video: Jul.10 — Peter Chatwell, head of European rates strategy at Mizuho International, discusses the outlook for the euro and European Central Bank policy after the European Commission cut its euro-area growth and inflation forecast […]

EU Cuts Euro-Zone Economic Outlook

Description video:
Jul.10 — Peter Chatwell, head of European rates strategy at Mizuho International, discusses the outlook for the euro and European Central Bank policy after the European Commission cut its euro-area growth and inflation forecast for next year as trade tensions and policy uncertainty weigh on the region. Chatwell speaks on \”Bloomberg Surveillance.\”

Eurozone growth forecasts cut due to coronavirus restrictions

The European Commission has been more negative about its eurozone economic growth prospects, forecasting a slower pace in 2021 as governments tackle the ongoing coronavirus pandemic and its new mutated varieties.

Brussels expects this year’s 19-member European region, will grow by 3.8%. Last November, the European Commission forecast the level of gross domestic product (GDP ) 4.2% for 2021.

The latest projections come at a challenging time for the European Union, as the introduction of the Covid-19 vaccine faces challenges in production, supply and bureaucracy. At the same time, European governments are concerned about mutations in the virus, which are considered more contagious. The longer the health emergency lasts, the longer EU countries have to extend social restrictions and lockdowns, which has an extremely negative impact on the economy.

«We remain in the painful grip of the pandemic, its social and economic consequences are all too obvious. However, there is finally a light at the end of the tunnel», – said economic commissioner Paolo Gentiloni (Paolo Gentiloni) in a statement on Thursday in connection with the vaccine rollout.

In the future, the European Commission expects that by 2022 the GDP of the eurozone will reach 3.8%, while in November next year the GDP level is projected at 3%.

Eurozone growth forecasts cut due to coronavirus restrictions

If you look at individual countries, in 2021, growth in Germany will be 3.2%, and in 2020 it will decline by 5%. On the other hand, France’s GDP is expected to be 5.5% this year after falling more than 8% in 2020.

European Commission forecasts suggest that social restrictions will be somewhat eased in the second quarter of 2021, but nevertheless, it is assumed that some sectoral restrictive measures will continue to be in force in 2022.