Eurozone | As vaccinations gain speed, upside risk is on the rise
The EU’s vaccine rollout will continue picking up steam in coming months after a lacklustre performance in Q1. Supply constraints have now been largely resolved, thanks to boosted production capacity. Supply is now also well diversified and therefore less susceptible to disruptions. Additionally, improvements in logistics will see further increases in daily vaccination rates.
What you will learn from this report:
- We estimate that the EU countries are well on their way to reaching the target of vaccinating 70% of adults before summer’s end.
- We see risks to our growth outlook for 2021 skewing to the upside on the back of accelerating inoculations, but downside risks remain tangible.
- Infection rates are falling across the EU but remain elevated as the more transmissible variants have taken over, which could delay reopenings. Still, our projections back up our view of gradual reopenings starting in Q2.
Finland’s growth forecast cut amid weak confidence and soaring inflation
We have lowered our 2022 GDP growth forecast for Finland to 1.5% from 1.7% last month, as weakening confidence further dampens the outlook. We expect inflation to peak higher with a greater passthrough to core prices, squeezing real incomes and denting consumption. Russia has accounted for almost 10% of Finland's goods trade, among the highest in Europe.Find Out More
Why we see eurozone inflation slowing sharply next year
We have revised our 2022 eurozone inflation forecasts sharply higher, to 6.0%, since the start of the Ukraine war, as energy and food prices began to soar and new supply bottlenecks emerged. That said, we still see inflation decelerating sharply to 1.3% in 2023, putting us below consensus. While we recognise significant risks to our views, inflation should slow to below 2% in H2 2023.Find Out More