Consumer demand is being held back by supply bottlenecks leading to higher prices and central bank unease. Economists at HSBC have recently lowered their 2021 GDP forecast for the eurozone to 5% but raised it for the UK to 7.1%.

How bottlenecks evolve are key for growth and inflation

“How these bottlenecks evolve in the coming months will therefore be key for the growth and inflation outlook into 2022. It seems likely that these pressures will persist until at least the middle of next year, even if they may not get much worse. But after that, how quickly shipping prices fall, backlogs alleviate, and people return to the labour force will have a significant impact on growth speeds, inflation rates, and how central banks respond.”

“We recently lowered our eurozone GDP forecasts for 2021 to 5.0% (from 5.2%) given the more drawn-out disruption to supply chains and manufacturing. There was no change to our forecast for 2022, which remains 4.0% while we see 2023 growth 0.1% higher, at 2.0%, due to stronger German manufacturing growth in H2 2022, once disruption has eased.”

“In the UK, we expect a slower rate of GDP growth in Q3 2021 than previously forecast given supply issues, but the government’s big upward revisions to growth in Q1 and Q2 means that we recently changed our annual growth forecasts for 2021 and 2022 to 7.1% and 5.1%, respectively.”

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD rebounds to 1.1350 on modest dollar weakness

EUR/USD regained its traction after declining toward 1.1320 during the European session and rose to 1.1350 area. The dollar's is facing modest selling pressure amid falling US Treasury bond yields and allowing the pair to continue to edge higher ahead of the weekend.

EUR/USD News

GBP/USD struggles to pull away from 10-day low set near 1.3550

GBP/USD fell toward 1.3550 on Friday and touched its weakest level in 10 days. Although the US Dollar Index stays in the negative territory in the early American session, the risk-averse market environment doesn't allow the pair to stage a convincing recovery.

GBP/USD News

Gold reclaims $1,840 amid falling US T-bond yields

Gold reversed its direction after testing $1,830 earlier in the day and turned positive on the day above $1,840. The benchmark 10-year US Treasury bond yield is losing more than 3% at 1.75%, fueling XAU/USD's rebound.

Gold News

BTC may capitulate to $30,000

Bitcoin price has dropped considerably over the last three weeks. The recent downswing has made things worse for BTC and hints that a steep correction could be on its way.

Read more

Will the Netflix stock price rebound?

Netflix stock edged down after better than expected Q4 results. Will the Netflix stock price rebound? Expectations of rising subscription and higher prices are bullish for Netflix stock price.

Read more

Forex MAJORS

Cryptocurrencies

Signatures