Eurozone: Deeper eurozone recession raises spectre of deflation – ABN Amro

Economists at ABN Amro have lowered the outlook for growth and inflation in 2020 and 2021 in the eurozone. 

Key quotes

“Annual GDP growth forecast for 2020 has been lowered to -6.9%, down from -4.3%.”

“Annual growth in 2021 now is expected to be 3.2%, up from an earlier expected 1.6%. At the end of our forecasting horizon (2021Q4) we expect GDP to be more than 3% below its 2019Q4 level (was -1.7% in our previous forecasts) and to be around 6% below the trend-level.”

“We expect core inflation to slide over the coming quarters end next year at levels that are not far from zero.”

“A recovery begins in Q3 with headline inflation reaching around 1.5% by the middle of next year. It then falls back down to around 0.5% by the end of 2021.”