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The economic rebound in the eurozone is expected to be smaller than previously expected at 4.2% in 2021 following a 7.8% recession in 2020, the European Commission’s Economic Growth Forecasts showed on Thursday. The economic growth in the third quarter is seen at 3%.

Key takeaways as summarized by Reuters

“Eurozone to contract 0.1% Q/Q in Q4 because of COVID-19 second wave restrictions.”

“Eurozone inflation to be 0.3% in 2020, 1.1% in 2021 and 1.3% in 2022.”

“Eurozone unemployment to reach 8.3% in 2020, 9.4% in 2021 and 8.9% in 2022.”

“Eurozone aggregated budget deficit to surge to 8.8% of GDP in 2020 from 0.6% in 2019, seen at 6.4% in 2021 and 4.7% in 2022.”

“Eurozone public debt to surge to 101.7% of GDP this year from 85.9% in 2019, seen rising further to 102.3% in 2021 and 102.6% in 2022.”

“Economic forecasts are surrounded by exceptional uncertainty.”

“Forecasts assume coronavirus related restrictions will remain in place over next two years but gradually ease and their impact will lessen.”

“Forecasts make the technical assumption there will be no trade deal with Britain and trade from January 1 will be on WTO terms.”

Market reaction

The EUR/USD pair preserved its bullish momentum after this report and was last seen gaining 0.67% on the day at 1.1800.