The survey results published by the European Central Bank showed that the eurozone economy is likely to avoid a recession in 2022.
As for the near-term prospects, the survey revealed that the economy will reach its bottom in the current quarter and will show a sharp acceleration in the next quarter.
The final data published by Eurostat showed that the eurozone economy expanded by 0.6% in the 1st quarter, which was faster than 0.2% growth in the 4th quarter (revised from +0.3%). Meanwhile, EU GDP growth also accelerated - to 0.7% from 0.5% in the 4th quarter.
In annual terms, the growth of the eurozone economy was 5.4% compared to 4.7% in the 4th quarter of 2021. As for the EU countries, GDP increased by 5.6% after an increase of 4.9% in the last three months of 2021.
According to the latest forecasts of the ECB, presented at the end of the June meeting, inflation in the eurozone this year will be 6.8%. Meanwhile, in 2023, price growth will slow down to 3.5%, and in 2024 — to 2.1%. Inflation excluding energy and food prices, according to ECB forecasts, will average 3.3% in 2022, 2.8% in 2023 and 2.3% in 2024. The ECB also expects the eurozone economy to grow by 2.8% this year, and by 2.1% in 2023 and 2024.
The survey revealed that in the 2nd quarter GDP will grow by 0.1%, and in the 3rd and 4th quarters the economy will expand by 0.4%.
As for the outlook for monetary policy, the survey revealed that the ECB will raise the deposit rate by 75 basis points this year and by 150 basis points by the end of next year, with the rate peaking at 1.25% in mid-2024.