Winter 2022 Economic Forecast: Growth expected to regain ...

After a soft patch, the economic expansion is set to regain pace in the second quarter of this year and remain robust over the forecast horizon. Following a ... Skiptomaincontent Youarehere: Home Business,Economy,Euro Economicperformanceandforecasts Economicforecasts Winter2022EconomicForecast:Growthexpectedtoregaintractionafterwinterslowdown Winter2022EconomicForecast:Growthexpectedtoregaintractionafterwinterslowdown PageContents ExecutiveSummary Map Forecastbycountry Documents Thematicboxes Media ExecutiveSummary TheEUeconomyenteredthenewyearonaweakernotethanpreviouslyprojected.Havingregainedthepre-pandemicoutputlevelinsummerlastyear,amoderateslowdownwasalreadyexpectedintheAutumnForecast.However,sincethenheadwindstogrowthhaveintensified.Afterasoftpatch,theeconomicexpansionissettoregainpaceinthesecondquarterofthisyearandremainrobustovertheforecasthorizon.Followingastrongrecoveryby5.3%in2021,theEUeconomyisnowforecasttogrowby4.0%in2022,asintheeuroarea,andby2.8%in2023(2.7%intheeuroarea). TheresurgenceofthepandemiclastautumnandtheexponentialspreadofthenewOmicronvarianthaveledtorenewedstrainsonhealthcaresystemsandanunprecedentedsurgeofabsencesfromworkinmanyEUcountries.GovernmentsacrosstheEUhavereinstatedrestrictions–thoughgenerallyofamilderormoretargetednaturethaninpreviouswaves.Persistentlogisticandsupplybottlenecks,includingshortagesofsemiconductorsandsomemetalcommodities,keepweighingonproduction,asdotheelevatedpricesofenergy.Strongerthanexpectedinflationarypressuresweighonhouseholds’purchasingpower. Thisforecastassumesthattheimpactontheeconomycausedbythecurrentwaveofinfectionswillbeshort-livedandthatmostofthesupplybottleneckswillfadeinthecourseoftheyear.Finally,inflationarypressuresareexpectedtomoderatetowardstheendoftheyear.Lookingbeyondthisshort-termturbulence,acontinuouslyimprovinglabourmarket,largeaccumulatedsavings,stillfavourablefinancingconditions,andthefulldeploymentoftheRecoveryandResilienceFacility(RRF)areallsettosupportaprolongedandrobustexpansionaryphase. ComparedtotheAutumnForecast,inflationprojectionshavebeenrevisedup,asenergypricesarenowsettoremainhighforlongerandpricepressuresarebroadeningtoseveralcategoriesofgoodsandservices.Inflationintheeuroareaisprojectedtopeakinthefirstquarterof2022andremainabove3%untilthethirdquarteroftheyear.Asthepressuresfromsupplyconstraintsandenergypricesfade,inflationisexpectedtodeclinemarkedlyinthefinalquarteroftheyearandsettleatbelow2%nextyear.Overall,inflationintheeuroareaisforecasttoincreasefrom2.6%in2021(2.9%intheEU)to3.5%(3.9%EU)in2022,beforedecliningto1.7%(1.9%EU)in2023.Thebalanceofriskstothegrowthoutlookisbroadlyeven.Thecurrentwaveofinfectionscouldhavealongerlastingeconomicimpactthanassumed,bringingfreshdisruptionstocriticalsupplychains.Ontheupside,householdconsumptioncouldgrowmorestrongly,asobservedfollowingpreviouswaves,whileinvestmentsfosteredbytheRRFcouldgenerateastrongerimpulsetoactivity.Theinflationprojectionsaresubjecttoupsiderisksifcostpressuresarepassedonfromproducertoconsumerpricestoalargerextent,increasingthelikelihoodofstrongsecond-roundeffects.RiskstothegrowthandinflationoutlookareaggravatedbygeopoliticaltensionsinEasternEurope. Map Forecastbycountry EUMemberStates Austria Germany Poland Belgium Greece Portugal Bulgaria Hungary Romania Croatia Ireland Slovakia Cyprus Italy Slovenia Czechia Latvia Spain Denmark Lithuania Sweden Estonia Luxembourg Euroarea Finland Malta EU France TheNetherlands   Documents EuropeanEconomicForecast.Winter2022English(1.2MB-PDF)DownloadPDF-1.2MB Winter2022EconomicForecast-Statisticalannex10February2022English(210.4KB-PDF)DownloadPDF-210.4KB Thematicboxes Box1.1:ProductionbottlenecksthroughthelensoftheCommission’sbusinesssurveys10February2022English(239.4KB-PDF)DownloadPDF-239.4KB Box1.2:Anupdateonenergypricedevelopments:pass-throughfromwholesaletoretail10February2022English(303KB-PDF)DownloadPDF-303KB Box1.3BusinessmanagersareupbeataboutinvestmentthisyearEnglish(231.6KB-PDF)DownloadPDF-231.6KB Media Pressreleaseof10February2022 Winter2022Forecastpresentation Winter2022EconomicForecastinfographic PressconferencebyCommissionerPaoloGENTILONIontheWinter2022EconomicForecast