Barclays expects a delay to Eurozone economic recovery

Barclays revises lower its 2022 Eurozone GDP growth forecast

Amid recent developments, the firm is less confident about the strength of the recovery in the euro area as they revise lower their 2022 growth projections for the region from 5.3% previously to 4.3% currently.
The 2021 GDP growth forecast remains unchanged at 3.9%. Barclays notes that:

“We expect a delayed and more modest economic recovery, due to recent negative epidemiological developments and their potential scarring effect. Our revised annual read GDP growth forecasts are 3.9% in 2021 (unchanged) and 4.3% in 2022 (-1.0%).

Our forecasts imply a growing divergence between the euro area and the US, and among euro area member states, with 2022 real per-capita GDP still 7% below pre-global financial crisis levels in Italy, but 20% and 16% above in the US and Germany.

Euro area governments are currently tightening mobility restrictions and, in our view, are likely to scale them back only late in Q2 and gradually, which will weaken domestic demand and, consequently, imports.”