Eurozone recovery seen dwindling amid COVID-19 resurgence - Reuters poll

According to the latest Reuters poll of economists, the coronavirus resurgence is seen derailing the Eurozone’s economic recovery, with weak growth and inflation outlooks.

Key findings

“The Oct. 15-22 Reuters poll found nearly 90% of economists or 48 of 55, said there was a high or very high risk the resurgence in cases now underway across Europe would halt that nascent euro zone recovery.”

“After contracting 11.8% in Q2, the economy was expected to have grown 8.9% in Q3, better than 8.1% predicted last month, and by far the strongest performance on record if realized. But growth in the current quarter will slip to 2.1%, lower than the 2.5% previously expected and substantially weaker than the 2.8% forecast in May when lockdowns were eased after the first wave of infections.”

“Over 60% of respondents, or 31 of 53, said the bloc’s jobless rate would not peak for at least six months. Only two said it already had. But the range of forecasts was wide, from 8.1% to 13.4%. Only a handful of economists predicted inflation would touch the European Central Bank’s target of just below 2% before end-2022.”

“The ECB is forecast to increase the size of its pandemic-related bond purchases by an additional 400 billion euros on top of the 1.35 trillion euros already announced.”