Economic Expansion Enters the Next Phase
Thanks to rapid progress in vaccination rates in industrialized countries, the recovery is entering the next phase. In the US and the EU a sustainable reopening of the services sector has already been implemented. The biggest risk to the economic outlook in the 2nd half of the year would be a breach of the current immunization of the general population by a virus mutation.
Following the lifting of restrictions, we expect a dynamic recovery of the euro zone economy in H2. We are forecasting GDP growth of 4.4% in 2021. Funds from the EU recovery and resilience facility will help countries such as Italy and Spain achieve a substantial growth spurt in 2022. We therefore expect growth momentum in the euro zone to remain at a high level of 4.1% in 2022.
In H1, energy prices were the main driver of rising headline inflation in the euro zone. Upward pressure from energy prices should ease in H2 as base effects fade. Due to special effects related to the pandemic, we expect core inflation to exert temporary upward pressure on headline inflation in H2.
As expected, strong economic growth was posted in the US in the first quarter on the back of two economic stimulus programs. The second stimulus package, in combination with further steps to open up the economy, at a minimum suggests that economic growth will accelerate again in the second quarter. The outlook for the third quarter, which has just begun, is positive as well.