On 10^th February 2022, the European Commission published the interim economic forecast covering annual and quarterly GDP and inflation for the current and following year for all Member States, as well as EU and euro area aggregates.

According to the forecast, the EU economy entered the new year weaker than previously projected. Having regained pre-pandemic output level in summer last year, a moderate slowdown was already expected in the Autumn Forecast. Economic expansion is set to regain pace in the second quarter of this year and remain robust over the forecast horizon. Following a strong recovery by 5.3% in 2021, the EU economy is now forecast to grow by 4.0% in 2022, as in the euro area, and by 2.8% in 2023 (2.7% in the euro area).

Compared to the Autumn Forecast, inflation projections have been revised up, as energy prices are now set to remain high for longer and price pressures are broadening to several categories of goods and services. Inflation in the euro area is projected to peak in the first quarter of 2022 and remain above 3% until the third quarter of the year. As the pressures from supply constraints and energy prices reduce, inflation is expected to decline considerably in the final quarter of the year and stabilise at below 2% next year. Overall, inflation in the euro area is forecast to increase from 2.6% in 2021 (2.9% in the EU) to 3.5% (3.9% EU) in 2022, before declining to 1.7% (1.9% EU) in 2023.