Eurozone Recovery Tracker gains ground after a holiday dip
Our eurozone Recovery Tracker rose 1.4pts to 80.3 in the two weeks ending January 9. We view the reading with a bit of caution, as it may reflect a reflexive rebound following the Christmas dip rather than the start of a steady improvement, as high-frequency data tend to be noisy at the start of the year.
What you will learn:
- The major factor behind the rise was a recovery in mobility, driven mainly by a seasonal rise in movement in workplaces after the holidays.
- Although we expect the Omicron wave to be sharp but short, health metrics in several countries indicate infections have yet to peak.
- Consequently, we anticipate continued voluntary social distancing and absenteeism due to self-isolation measures.
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