Economy in In The Eurozone will Get up Speed 2021
The International Monetary Fund has raised its economic forecast for the euro zone for this year. The economy in the monetary union will grow by 5.0 percent in 2021 instead of the 4.6 percent forecast in July, the IMF announced on Tuesday. The reason for the better forecast is higher growth in France and Italy. For Austria, the IMF expects 3.9 percent this year and 4.5 percent in 2022; in April the IMF was still assuming 3.5 and 4.0 percent.
For 2022, the IMF left its forecast at 4.3 percent growth in the euro zone. According to the IMF, the global economy should grow by 5.9 percent this year and by 4.9 percent in the coming year. The values are almost unchanged from the previous forecast. The recovery of the global economy from the coronavirus crisis is thus continuing, but is losing some of its strength.
“Overall, the risks to the economic outlook have increased,” said the global economic outlook that ushered in the IMF autumn meeting. Supply chain problems and rising inflation were cited as examples. In many developing countries, the pandemic is preventing a return to normal. The outlook for poorer countries has become significantly more gloomy.
The IMF again warned of huge differences in economic recovery. This is mainly due to vaccination progress and state aid for companies and households. In richer countries, almost 60 percent of the population is already fully vaccinated against Covid, in poorer countries, on the other hand, only four percent. The priority must therefore be to prevent corona mutations and bring vaccine to all countries.
In the corona year 2020, the global economy shrank by 3.1 percent. For 2021, the prospects for the USA in particular, but also for Germany, Spain and Japan, are no longer assessed as rosy. Delivery bottlenecks – for example for semiconductors – are an important reason in the USA and Germany, in Japan the month-long state of emergency as a result of corona record infections is having a negative effect. After 2022, the IMF is again assuming more normal growth rates – around 3.3 percent in the medium term.
For the USA, the IMF expects growth of 6.0 percent in 2021, a whole point less than before. In 2022 there should be an increase of 5.2 percent. For Germany, the experts are assuming growth of 3.1 and 4.6 percent. This lowered the forecast for this year by 0.5 points, but increased it by this order of magnitude for 2022. The recovery will therefore be postponed more strongly into the next year. China remains a driving force in the global economy. Growth rates of 8.0 and 5.6 percent are expected here – in both cases a tad less than estimated in July.
According to the IMF, the recent sharp rise in inflation rates is due to several factors. For example, due to the pandemic, supply and demand are no longer in equilibrium in many industries, raw material prices and energy costs are increasing by leaps and bounds, and special factors in the corona crisis, such as the value added tax that has now been reduced in Germany, have now expired. Poorer countries are particularly noticing the significantly higher food prices – they have risen by around 40 percent since the outbreak of the pandemic. According to the IMF, it is difficult to forecast inflation. For most countries, however, the peak should be reached by the end of the year. In mid-2022, levels should be reached again that were common before the corona crisis. In some emerging and developing countries, however, price pressure is likely to remain high next year.
For Europe, the IMF is forecasting consumer prices to grow by 4.2 percent in 2021, and by 3.6 percent in 2022. For comparison: In the corona year 2020 there was hardly any inflation in the major EU countries. The European Central Bank is aiming for around two percent as the ideal value for the economy.