The President of the European Central Bank, Christine Lagarde, assessed today that the economic activity in the Eurozone should “exceed its prepandemic level” by the end of the year.
The recovery of the economy is constantly growing, but the delta strain of the virus could “delay the full opening”, Lagarde told reporters.
Today, the European Central Bank increased the forecast of GDP growth in 19 countries of the Eurozone for 2021 in the context of economic recovery after the pandemic, and assessed that the price growth is still temporary.
The monetary institution predicts economic growth of five percent in 2021, compared to 4.6 percent as predicted at the last announcement in June. The bank also expects inflation of 2.2 percent in 2021, compared to 1.9 percent forecast in June. That growth will, therefore, exceed the institution’s medium.term goal of two percent inflation.
However, the rise in prices is “mostly temporary”, Lagarde said, adding that she also sees signs that the rise in prices could be more permanent.
According to banks, inflation should slow down in 2022 to 1.7 percent, and then to 1.5 percent in 2023.
With such economic indicators, the ECB decided today to slightly mitigate its measures for extraordinary support to the economy, introduced at the beginning of the health crisis, which were related to debt redemption.
“The recovery is based on the success of the vaccination campaign in Europe, which enabled a significant reopening of the economy,” Lagarde said.
ECB experts slightly reduced, from 4.7 to 4.6 percent, their forecast of the economic raster for 2022 and left it unchanged at 2.1 percent of the growth forecast for 2023.
The jump in inflation is explained by the rise in oil prices and pressure on costs arising from temporary shortages of materials and equipment, Lagarde said, but added that those shortages should be overcome in the first half of 2022.