European Central Bank cuts 2021 growth outlook, but more upbeat for 2022

The eurozone’s pandemic-induced recession is expected to be less severe than expected in 2020 at -7.3%, ECB chief Christine Lagarde said Thursday, but next year’s rebound will be smaller than initially forecast.

The 19-nation euro area is now expected to see the economy grow by 3.9% in 2021, compared with an earlier forecast of 5.0 percent. In 2022, the economy should expand by 4.2%. In its first projection for 2023, the ECB said it was penciling in the growth of 2.1%.

The Frankfurt institution upgraded its euro area economic growth figures for 2020 and 2022, but is now expecting a smaller rebound than before for 2021.

Inflation, already well below the ECB’s target of just under two percent, remained “disappointingly low”, Lagarde said.

Lagarde partly blamed low energy prices and a temporary reduction in Germany’s VAT rate.

Here is a table with all the ECB’s major projections. The previous forecasts from September are given in brackets.

The figures are expressed as percentage changes, and are all positive unless indicated otherwise.