European economy: coming out of the shadows
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Europe's economy has bounced back strongly with re-opening boosting output and consumption. Labour market conditions have improved markedly also.
The key takeaways from this Economic insights are:
- Shadow unemployment has declined sharply across Europe, with the furlough rate falling to 5% of the labour force.
- As the improving trend in the labour market continues, we expect output in the euro area to return to pre-crisis levels in the fourth quarter of this year.
- We expect euro area real GDP growth to peak in the third quarter of 2021, and then moderate.
- We forecast euro area growth of 4.9% this year and 4.3% in 2022.
- However, with pandemic risks on the rise, the balance of risks is skewed to the downside and targeted business closures may increase again, slowing the recovery.