UBS revises lower its 2021 GDP growth forecast for the euro area
In a note, economists at the firm says that there is a high risk of a contraction in both Q4 2020 and Q1 2021 for the Eurozone economy, due to new coronavirus restrictions. Thus, leading to a double-dip recession to start the new year.
The firm cut its 2021 growth forecast for the euro area to 5% from 6.2% previously but lifted its 2022 forecast to 5.4% from 5% previously. On inflation, the firms sees euro area inflation at 1.1% this year and 1.3% next year with "temporary spikes" a possibility.
As for policy in the region:
"We expect fiscal and monetary policy to remain supportive in 2021, with a cautious degree of normalisation in 2022."
