The European Union is optimistic that EU countries will be rebound soon since the results of the first quarter economic activities had surpassed expectations. Moreover, the second quarter, which started with enhanced health situation has allowed the economies of member countries to get back on track; making the near-end-of-year prospect appear much better than what was originally forecasted.
Eurostat’s Preliminary Flash Estimate had earlier suggested that there would be a great decline of GDP during the 2021 first quarter.On the contrary the decline was milder, due to the reduced numbers of new infections and hospitalisations, the progress in vaccination, and effective implementation of containment strategy,
That being the case, EU Member States agreed to reopen their economies in order to improve the welfare of service sector businesses.
GDP Growth in 2nd Quarter Expected to Continue in 2022
Survey results and data tracking mobility reports show positive indications that a bounce back in consumption has already begun. The EU believes that the trend will continue and will strengthen in the following months.
In total, the Gross Domestic Product (GDP) forecasts for this year is expected to increase by 4.8% and by 4.5% next year, in both the Euro area and in EU countries.
In the Euro area, inflation is expected to average 1.9% this year, and by 1.4% in 2022. Despite the high uncertainty and risks surrounding the growth interpretation, the overall outlook is that everything looks balanced.
However, if the supply constraints persist the pressure will result in price increases that will likely be passed on to consumers. In that would be the case. inflation rate might be higher than what the EU foresees.