Lockdowns and Easy Money Bring a Weak Recovery for Europe

If we looked at most investment bank outlook reports for 2021, one of the main consensus themes was a strong conviction on a rapid and robust eurozone recovery. They were wrong.

This week, Capital Economics joined other analysts and downgraded the eurozone growth, highlighting “We now think that the eurozone economy will recover more slowly than we previously anticipated, growing by about 3% this year and 4.5% in 2022. Meanwhile, euro-zone government bond yields seem unlikely to fall much further, and with Treasury yields set to increase significantly, we expect the widening yield gap to cause the euro to weaken against the US dollar.”

This wave of downgrades, which includes the OECD and European Central Bank estimates, comes with the same old and tired upgrade of next year’s expectations, which will likely be downgraded again further down the line.

 
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Πηγή: mises.org