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European Commission Sees 2023 EA Inflation Averaging +4.0%

EUROZONE DATA
MNI (London)
  • The European Commission's Summer 2022 economic forecast projects EU economic growth at 2.7% in 2022 and 1.5% in 2023. Euro area growth is anticipated to be marginally softer at 2.6% in 2022 and 1.4% in 2023. The 2023 forecasts are substantial 0.8pp and 0.9pp cuts from the Spring report.
  • Average inflation is forecasted to peak at 7.6% in the eurozone (8.3% for the EU) in 2022, easing to 4.0% (EA) and 4.6% (EU) in 2023.
  • After reaching a historic high of +8.6% y/y in June and averaging at 7.1% y/y over the first six months of the year, the updated euro area forecast of a 7.6% average allows room for higher inflation in upcoming months, tapering into the end of the year.
  • The report highlighted the jump in energy and food prices due to the Ukraine war, as well as slowing US growth and China's lockdowns as the key risks to growth.
  • GDP expectations were revised down 0.1pp to flatline in the eurozone and contract by -0.1% q/q in the EU for Q2 2022. The tourism sector should remain robust this year. As such the growth forecast remains at 2.7% for 2022.
  • Gas supply and the continued risk of pandemic resurgence cannot be ruled out. The only silver lining appears to be recent falls in commodity prices including oil, which may see inflationary pressures ease, whilst the record low unemployment could see household consumption remain robust.

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  • The European Commission's Summer 2022 economic forecast projects EU economic growth at 2.7% in 2022 and 1.5% in 2023. Euro area growth is anticipated to be marginally softer at 2.6% in 2022 and 1.4% in 2023. The 2023 forecasts are substantial 0.8pp and 0.9pp cuts from the Spring report.
  • Average inflation is forecasted to peak at 7.6% in the eurozone (8.3% for the EU) in 2022, easing to 4.0% (EA) and 4.6% (EU) in 2023.
  • After reaching a historic high of +8.6% y/y in June and averaging at 7.1% y/y over the first six months of the year, the updated euro area forecast of a 7.6% average allows room for higher inflation in upcoming months, tapering into the end of the year.
  • The report highlighted the jump in energy and food prices due to the Ukraine war, as well as slowing US growth and China's lockdowns as the key risks to growth.
  • GDP expectations were revised down 0.1pp to flatline in the eurozone and contract by -0.1% q/q in the EU for Q2 2022. The tourism sector should remain robust this year. As such the growth forecast remains at 2.7% for 2022.
  • Gas supply and the continued risk of pandemic resurgence cannot be ruled out. The only silver lining appears to be recent falls in commodity prices including oil, which may see inflationary pressures ease, whilst the record low unemployment could see household consumption remain robust.