ECB announces new economic forecasts on Thursday

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The eurozone economy expanded more than expected in early 2022, but the upgrade was driven by trade, revealing consumer pressure.

Output increased by 0.6% from the three months before the first quarter. This is higher than the previous measurement of 0.3% ahead of schedule released last month. Eurostat said Wednesday that consumption fell 0.7% amid a prolonged blockade, despite a 0.6% increase in employment.

The currency block of 19 members faces contradictory forces as the relaxation of Covid-19 restrictions coincides with the Russian war in Ukraine. While homes and businesses are suffering from rising prices, the service sector is seeing strong demand and the tourism industry is preparing for the heat of summer.

The underlying momentum has boldly shown that European Central Bank officials are regaining stimulus, perhaps with a rate hike in July for the first time in more than a decade. The ECB will release new economic forecasts on Thursday. This is because the Board concludes the two-day meeting and decides on the next policy step.

© 2022 Bloomberg LP

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