Actionable insights straight to your inbox


European Commission Lowers Eurozone’s Economic Forecast for 2021

The revised forecast calls for 3.8% growth in 2021 and 2022 for the eurozone and 3.7% growth this year and 3.9% growth next year in the European Union.

Image source: European Commission, Feb. 11, 2021

The European Commission revised its outlook for the eurozone’s economic recovery, projecting a lower growth rate for this year as a second wave of the COVID-19 pandemic has triggered another round of lockdowns.

In its winter interim economic forecast released Thursday, the Brussels-based institution also revised projections for next year, saying 2022’s growth will be stronger than initially expected due to more widespread vaccination rollouts and loosened social restrictions. 

As a result, economic output should reach its pre-pandemic level by the middle of next year – sooner than the previous forecast, which projected recovery would not be complete until 2023.

According to the outlook, the 19-member eurozone will grow by 3.8% this year and at the same pace next year, after a 6.8% drop in 2020. The previous forecast issued in November 2020 called for 4.2% gross domestic product (GDP) growth for 2021 and 3.0% in 2022.

Economic activity in the wider 27-nation European Union is projected to increase 3.7% this year and 3.9% in 2022, following last year’s 6.3% decline.

France and Spain will see the strongest growth this year of 5.5% and 5.6%, respectively, and will be among the highest growth countries in 2022. Last year, France’s GDP dropped more than 8%, while Spain saw an 11% contraction.

According to the outlook, growth is expected to pick-up moderately during the second quarter and more vigorously in the third, led by consumer spending, as well as global trade, as vaccination efforts ramp up.

Paolo Gentiloni, European Commissioner for Economy, said in a press release, “Europeans are living through challenging times. We remain in the painful grip of the pandemic, its social and economic consequences all too evident. Yet there is, at last, light at the end of the tunnel.”

The projections, however, “are subject to significant uncertainty and elevated risks, predominately linked to the evolution of the pandemic and the success of vaccination campaigns," according to the forecast.

Valdis Dombrovskis, European Trade Commissioner and Executive Vice-President for An Economy that Works for People, said a “strong European response” remained vital to tackling the broader impact of the crisis, including job losses, a weakened corporate sector and rising inequalities. 

“We will still have a great deal to do to contain the wider socio-economic fallout,” he said.


Source: Equities News




The implications of the dollar potentially losing its status as the global reserve are numerous. Obviously, there may be currency risks, and decreased demand for U.S. Treasuries could lead to rising interest rates. I would also expect to see massive commodity price swings.
Many of us economy-watchers have been expecting recession, though with significant differences on odds and timing. Regardless, recent banking developments just made recession more likely and may have accelerated its onset.
Many people think of position size in terms of how many shares they own of a particular stock. But it’s much smarter to think of it in terms of what percentage of your total capital is in a particular stock.