The Eurozone economy recovered in Q3, after the recession in Q1 and Q2 last year but it seems like the expansion didn’t last too long. The economy of the Euro area turned negative in Q4 of 2020, declining by 0.7%, while the Q1 of this year should be worse, considering the new lock-downs and other restrictions, especially for small and medium sized businesses.
- Q4 final GDP -0.7% vs -0.6% second estimate
- 2021 GDP -4.9% vs -5.0% second estimate
Looking at the details, household consumption fell by 3% q/q after the revised 14.1% q/q jump in Q3 while government expenditure expanded by another 0.4% q/q after the revised 4.6% q/q jump in Q3 last year.
The data doesn’t really do much but reaffirm a potential double-dip recession in the Eurozone as Q1 economic conditions may also present a contraction.
That said, the focus of the market remains more geared towards the 2H 2021 outlook.
OECD presents their latest economic forecasts, outlook
- 2021 global GDP forecast +5.6% (previously +4.2%)
- 2021 US GDP forecast +6.5% (previously +3.2%)
- 2021 Eurozone GDP forecast +3.9% (previously +3.6%)
- 2021 UK GDP forecast +5.1% (previously +4.2%)
The organisation also raises its 2022 global GDP growth forecast to 4.0% from 3.7% previously in December. The latest outlook projects a significant boost to the US and global economy, helped by Biden’s $1.9 trillion stimulus package.
The report highlights that Europe risks falling behind in the global upswing with expectation for global output to rebound above pre-pandemic levels by mid-2021.