Growth forecast from the European Central Bank

The European Central Bank reported that the Gross Domestic Product (GDP) in the Euro Area is expected to exceed the level before the new type of coronavirus (Kovid-19) epidemic in the first quarter of 2022.

The minutes of the policy meeting of the European Central Bank (ECB) Executive Council held on 9-10 June 2021 have been published. In the meeting minutes, it was noted that the Euro Zone is expected to close the vaccination gap with the USA at the beginning of the summer, and that the high rate of vaccination contributed to the economy’s faster growth than analysts expected.

“Markets expect annual inflation to be nearly 1.7 percent over the next two years, adjusted for the previously negative inflation risk premium,” the ECB minutes said. statement was included.

“Option prices show that markets are pricing in almost a quarter of the chance that Eurozone inflation will average more than 2 percent over the next five years,” the bank’s minutes said. As a result, changes in inflation compensation have remained the sole driver of risk-free nominal interest rate developments in recent weeks.” Statements included.

According to the bank’s financial projections for June, it was noted in the minutes that the budget deficit in the Euro Zone is expected to reach 7 percent in 2021 and to decrease to 3 percent in 2022, due to the financial support provided during the epidemic.

The minutes also noted that some members voiced concerns that the continued rise in market rates could lead to tightening of broader financing conditions.

In the meeting minutes, where it was stated that it was extremely important to maintain appropriate financing conditions throughout the epidemic, it was noted that the financing conditions were too fragile to allow a meaningful decrease in asset purchases.

INCREASED INFLATION SHOULD BE EVALUATED IN A MEDIUM-TERM PERSPECTIVE

In the minutes, it was stated that the real Gross Domestic Product of the region is expected to exceed the pre-epidemic level in the first quarter of 2022, according to the bank’s June estimates.

In the ECB minutes, it was emphasized that the headline inflation, which was 1.3 percent in March, 1.6 percent in April and 2 percent in May, was mainly due to the base effect of the increase in energy prices.

It was noted in the meeting minutes that the council members broadly agreed on the importance of reviewing the temporary increase in inflation in 2021.

In its latest strategy, the ECB stated that the inflation target would rise to 2 percent and that the bank could temporarily exceed the inflation target at a moderate level.

The bank also raised its Eurozone economic growth forecasts from 4.3 percent to 4.8 percent for 2021, and from 4.4 percent to 4.5 percent for 2022.


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Source: bigpara- GÜNDEM by bigpara.hurriyet.com.tr.

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