In a hearing at the European Parliament, ECB President Christine Lagarde stated that it is evident that the economic recovery in the euro area is increasingly advanced.
Source: European Central Bank
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Lagarde noted that policymakers expected “continued strong growth” in H2, “enabling euro area output to exceed its pre-pandemic level by the end of the year.”
GDP growth in the European economy is forecasted to reach 5% in 2021, then soften to 4.6% in 2022 and 2.21% in 2023. Risks to economic growth are “broadly balanced.”
Eurozone inflation is projected to “rise further this autumn.” But Lagarde emphasized, “We continue to view this upswing as largely temporary.”
ECB’s forecasts foresee annual inflation at 2.2% in 2021, 1.7% in 2022, and 1.5% in 2023. Some factors that could lead to stronger price pressures than anticipated include inflation shortages of materials and tools and higher than expected wage demands.