Eurozone | Europe’s consumer boom faces several challenges

We expect above-average growth in the eurozone over the coming quarters given the ample pent-up demand in the aftermath of the crisis. In the short term, economies will still benefit from reopening tailwinds but will be facing several challenges. We see euro area GDP returning to pre-pandemic levels in Q4 2021.

What you will learn:

• Consumer spending will remain the main engine of growth given the strong recovery in employment and incomes as well as the massive stock of savings accumulated by households during the crisis.
• Supply-side issues represent the other main recovery headwind. With global supply-chain problems lingering longer than expected, the industrial sector is unlikely to contribute meaningfully to the recovery in the second half of the year.
• Despite the problems plaguing the industrial sector, we expect a strong cycle for capital spending.