The Euro Area started 2021 with a decline in GDP relative to both 2020-Q4 and 2020-Q1. This drop is driven by a decrease in consumption due to strict national containment measures taken to curb the second wave of the COVID-19 pandemic, but has been cushioned by a 3% increase in government spending. From 2021-Q2, the OECD predicts a positive growth of GDP in the Euro Area and expects it to stabilize at an annual growth rate of about 5% by the end of the year. The unemployment rate has decreased slightly relative to the previous quarter, but is still 0.9 percentage points higher than in 2020-Q1. According to the OECD economic outlook, it is expected to gradually decline, as economic activity transits towards normalcy, reaching 5.7% by the end of 2022. Inflation is positive and around 1 percent, suggesting a modest increase in the average price level due to the positive growth prospects in the next quarters.

August 2021