European economic forecast : spring 2022 (Interim).
Date: 2022-06-24
Institutions: Directorate-General for Economic and Financial Affairs
Subjects: EU Member State, European Union, economic fluctuation, economic forecasting, economic growth, economic policy, economic situation, euro area, gross domestic product, report, short-term forecast

ISSN 2443-8014 (online)

European 
Economic 
Forecast

Spring 2022

INSTITUTIONAL PAPER 173 | MAY 2022

EUROPEAN ECONOMY

Economic and 
Financial Affairs

           
European  Economy  Institutional  Papers  are  important  reports  analysing  the  economic  situation  and 
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European Commission 
Directorate-General for Economic and Financial Affairs 

European Economic Forecast 
Spring 2022  

EUROPEAN ECONOMY                                                                                    Institutional Paper 173 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ABBREVIATIONS 

Countries and regions 

EU  
EA 
BE  
BG  
CZ  
DK  
DE  
EE  
IE  
EL  
ES  
FR  
HR 
IT  
CY  
LV  
LT  
LU  
HU  
MT  
NL  
AT  
PL  
PT  
RO  
SI  
SK  
FI  
SE  
UK  
CN 
JP 
US  

European Union 
Euro area 
Belgium 
Bulgaria 
Czechia 
Denmark 
Germany 
Estonia 
Ireland 
Greece 
Spain 
France 
Croatia 
Italy 
Cyprus 
Latvia 
Lithuania 
Luxembourg 
Hungary 
Malta 
The Netherlands 
Austria 
Poland 
Portugal 
Romania 
Slovenia 
Slovakia 
Finland 
Sweden 
United Kingdom 
China 
Japan 
United States of America 

AE 
EFTA  
EME 
EMU 
MENA  
ROW 

Advanced economy 
European Free Trade Association 
Emerging markets economy 
Economic and Monetary Union 
Middle East and North Africa 
Rest of the World 

Economic variables and institutions 

CPB 
CPI  
ECB  
EUI 
ESI  
GDP  
GNI  
HICP  
IMF  

Netherlands Bureau for Economic Policy Analysis 
Consumer price index 
European Central Bank 
Economic Uncertainty Indicator 
Economic Sentiment Indicator 
Gross Domestic Product 
Gross National Income 
Harmonised Index of Consumer Prices 
International Monetary Fund  

iii 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OECD  
OPEC 
PMI  

Organisation for Economic Cooperation and Development 
Organization of the Petroleum Exporting Countries 
Purchasing Managers’ Index 

Other abbreviations 

Asset Purchase Programme 
Joint Harmonised EU Programme of Business and Consumer Surveys 
Coronavirus disease 2019  

APP 
BCS 
COVID-19 
FIGARO  Full international and global accounts for research in input-output analysis 
GFC 
GM 
HEM 
NACE 
NGEU 
NLG 
PEPP 
RRF 
RRP 
SME 
SURE 
an Emergency 
TTF 
TLTRO III 
VAT 

Global Financial Crisis 
European Commission's Global Multi-country model 
Hypothetical extraction method 
Statistical classification of economic activities in the European Community 
Next Generation EU 
Natural Liquefied Gas 
Pandemic Emergency Purchase Programme 
Recovery and Resilience Facility 
Recovery and Resilience Plan 
Small and medium-sized enterprise 
European  instrument  for temporary  Support  to  mitigate  Unemployment  Risks  in 

Title Transfer Facility 
Targeted longer-term refinancing operations 
Value-added tax 

Graphs/Tables/Units 

bbl  
bn  
bp. /bps.  
euro/MWh 
lhs  
mn  
pp. / pps.  
pt. / pts.  
Q  
q-o-q%   
rhs  
tr 
y-o-y%   

Currencies 

EUR  
ECU  
BGN  
CZK  
DKK  
GBP  
HUF  
HRK  
ISK  
MKD  
NOK  
PLN  
RON  

Barrel 
Billion 
Basis point / points 
Euro per megawatt hour 
Left hand scale 
Million 
Percentage point / points 
Point / points 
Quarter 
Quarter-on-quarter percentage change 
Right hand scale 
Trillions 
Year-on-year percentage change 

Euro 
European currency unit 
Bulgarian lev  
Czech koruna  
Danish krone 
Pound sterling 
Hungarian forint  
Croatian kuna 
Icelandic krona 
Macedonian denar  
Norwegian krone 
Polish zloty  
New Romanian leu 

iv 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RSD 
SEK  
CHF  
JPY  
RMB  
TRY  
USD  

Serbian dinar  
Swedish krona 
Swiss franc 
Japanese yen 
Renminbi 
Turkish lira  
US dollar 

v 

 
 
 
 
 
 
 
 
CONTENTS 

Executive Summary 

PART I: 

Economic outlook for EA and EU 

1.  Setting the scene 

2.  Economic outlook 
2.1.  International environment 
2.2.  Financial conditions 
2.3.  The growth outlook 
2.4.  Labour market 
2.5.  Inflation 
2.6.  Current account 
2.7.  Public finances and policy stance 

3.  Risks 

4.  Special issue: Alternative scenarios on the economic outlook 

5.  Boxes 

PART II: 

Prospects by individual economy 

Euro Area Member States 
1. 
Belgium 
2.  Germany 
Estonia 
3. 
4. 
Ireland 
5.  Greece 
Spain 
6. 
France 
7. 
Italy 
8. 
9. 
Cyprus 
10.  Latvia 
11.  Lithuania 
12.  Luxembourg 
13.  Malta 
14.  The Netherlands 
15.  Austria 
16.  Portugal 
17.  Slovenia 
18.  Slovakia 
19.  Finland 

Non-EA Member States 
20.  Bulgaria 
21.  Czechia 
22.  Denmark 
23.  Croatia 
24.  Hungary 
25.  Poland 

1 

7 

9 

17 
17 
21 
24 
33 
38 
42 
44 

49 

51 

57 

59 

61 
62 
64 
66 
68 
70 
72 
74 
76 
78 
80 
82 
84 
86 
88 
90 
92 
94 
96 
98 

101 
102 
104 
106 
108 
110 
112 

vii 

26.  Romania 
27.  Sweden 

Candidate Countries 
28.  Albania 
29.  Montenegro 
30.  North Macedonia 
31.  Serbia 
32.  Turkey 

Other non-EU Countries 
33.  The United Kingdom 
34.  The United States 
35.  Japan 
36.  China 
37.  EFTA 
38.  Russian Federation 

Statistical Annex 

Previous European Economic Forecasts 

LIST OF TABLES 

1. 
I.1.1. 
I.2.1. 
I.2.2. 
I.2.3. 
I.2.4. 
I.2.5. 
I.2.6. 
I.4.1. 

Overview - the spring 2022 forecast 
Economic impact of the Russian invasion of Ukraine on the EU 
International environment 
Composition of growth - EU 
Composition of growth - euro area 
Labour market outlook - euro area and EU 
Inflation outlook - euro area and EU 
General Government budgetary position - euro area and EU 
Specification of alternative scenarios 

LIST OF GRAPHS 

I.2.1. 
I.2.2a. 
I.2.2b. 
I.2.2c. 
I.2.3. 
I.2.4. 

I.2.5. 
I.2.6. 
I.2.7. 
I.2.8. 
I.2.9. 
I.2.10. 
I.2.11. 
I.2.12. 

Growth in global GDP and global PMIs 
Energy commodities' prices 
Basic metals' prices 
Agricultural commodities' prices 
World import volumes 
Changes in contribution to global non-EU import growth: Spring 
2022 vs. Winter 2022 Forecast 
Global financial conditions 
Yield curves in the US and the euro area 
Financial conditions' indicators 
Spreads to the German bund yield, 10-year maturity 
Euro area corporate bond spreads, 5-year maturity 
Stock market performance 
Current pandemic trends, EU 
Mobility and stringency of restrictions, EU composite 

viii 

114 
116 

119 
120 
122 
124 
126 
128 

131 
132 
134 
136 
138 
140 
143 

147 

183 

1 
10 
18 
29 
31 
38 
41 
45 
53 

17 
18 
18 
18 
20 

21 
21 
21 
22 
23 
23 
24 
24 
25 

 
 
 
I.2.13. 
I.2.14. 
I.2.15. 

I.2.16. 
I.2.17. 
I.2.18. 

I.2.19. 

I.2.20. 
I.2.21. 
I.2.22. 
I.2.23. 
I.2.24. 
I.2.25. 
I.2.26. 
I.2.27. 
I.2.28. 
I.2.29. 

I.2.30. 
I.2.31. 

I.2.32. 

I.2.33. 

I.2.34. 
I.2.35. 
I.2.36. 
I.2.37. 
I.2.38. 
I.2.39. 
I.2.40. 
I.4.1. 

I.4.2. 
I.4.3. 
I.4.4. 
I.4.5. 
I.4.6. 

GDP demand-side components, EU 
Gross value added in main sectors, EU 
European Commission Consumer Surveys, gap between future and 
current expectations 
Real GDP growth path, EU 
March/April 2022 investment survey results, EU 
Investment breakdown and investment rates since 2019, EU 
excluding IE 
Consumers' assessment of the past and future general economic 
situation, EU 
Households' income, demand and savings 
Exports and external demand breakdown 
Real GDP growth, EU and Member States, 2021-2023 
Employment in the EU 
Unemployment rates in the EU 
Inflation dispersion across Member States 
Increase in food and food input prices 
Pass-through of food prices along the supply chain in the EU 
Inflation breakdown, EU 
Inflation expectations derived from implied forward inflation-linked 
swap rates 
Current-account balance, EU 
Change in terms of goods' trade vs. change in current account 
balance, EU, 1996-2023 
Change of terms of goods' trade in 2022 vs. change of goods' 
balance in 2022, Member States 
Importance of tourism vs. changes in the services trade balance, 
2021-2023 
Budget balance in Member States, 2021-2023 
Drivers of the change in the government balance, EU 
Expenditure and revenue developments, EU 
Public investment in the EU, 2019 and 2023 
Debt developments, EA 
General government debt developments 
Fiscal stance in the EU and the euro area 
Euro area private consumption deflator growth, deviations from 
trend 
Euro area real GDP growth, deviations from trend 
Real GDP growth rates across scenarios, euro area 
Inflation rates across scenarios, euro area 
Drivers of real GDP growth 
Drivers of inflation 

LIST OF BOXES 

I.1.1. 
I.2.1. 
I.2.2. 
I.5.1. 

Key assumptions concerning the forecast 
Carry-over effects and the annual growth forecast for 2022 
Member States’ vulnerability matrix 
Some technical elements behind the forecast 

26 
26 

27 
30 
30 

31 

31 
32 
32 
33 
33 
38 
39 
40 
40 
41 

42 
43 

43 

43 

44 
44 
45 
45 
46 
46 
47 
47 

52 
52 
53 
54 
54 
54 

13 
28 
34 
57 

ix 

 
 
 
 
 
x 

 
 
FOREWORD 

Russia’s  invasion  of  Ukraine  is  causing  untold  suffering  and  destruction.  It  is  also  weighing  on 
Europe’s  economy.  The  shocks  unleashed  by  the  war  are  exacerbating  pre-existing  headwinds  to 
growth in the EU, which were not long ago set to subside. Further upward pressures on commodity 
prices,  renewed  disruptions  in  logistics  and  global  value  chains,  increased  uncertainty  and  an 
accelerated  tightening  in  financial  conditions  force  a  significant  downgrade  of  the  EU  growth 
outlook, while inflation is now expected to be higher, broader and more persistent.  

Output  is  nevertheless  projected  to  keep  expanding  throughout  the  forecast  horizon,  thanks  to 
fading pandemic-related containment measures and the tailwinds of the strong policy action taken 
during  the  pandemic.  A  record  strong  and  still  improving  labour  market  and  a  gradual 
normalisation  of  savings  behaviour  are  set  to  offset  rising  cost  of  living  and  prop  up  private 
consumption.  Investment  is  expected  to  benefit  from  the  full  deployment  of  the  Recovery  and 
Resilience Facility. Towards the end of the forecast horizon, price pressures are expected to fade, 
setting headline inflation on a declining path of convergence towards – though still above – target.  

The uncertainty around the baseline scenario is extreme and the balance of risks is skewed heavily 
towards unfavourable outcomes. An escalation of the war, a sudden stop of energy deliveries, or a 
further  deceleration  of  economic  activity  in  the  US  and  China,  could  result  in  a  much  grimmer 
outlook.  

Faced  with  a  shock  that  largely  weighs  on  the  supply  side  of  the  economy,  Member  States  will 
have to recalibrate their policy tools deployed during the pandemic. Over the past couple of years, 
fiscal  firepower  was  successfully  mobilised  to  support  aggregate  demand  and  stabilise 
employment,  thereby  also  safeguarding  price  stability  in  face  of  deflationary  pressures.  Today, 
interventions should primarily focus on accelerating structural changes, while protecting the most 
vulnerable  segments  of  society  against  the  impact  of  higher  energy  prices.  Importantly,  the 
powerful instrument deployed by the EU to support the economic recovery in the aftermath of the 
pandemic shock can still be counted upon to face this new challenge. The timely implementation of 
the  investment  and  reform  pillars  of  the  RRF  is  as  relevant  as  ever  to  reduce  fossil  fuel 
dependency from Russia and enhance the long-term growth potential of the EU economy.   

                              Director General 
                              Economic and Financial Affairs 

xi 

 
 
 
 
 
 
 
 
 
RUSSIAN INVASION TESTS EU ECONOMIC 

RESILIENCE 

EXECUTIVE SUMMARY 

Almost two years after 
the start of the pandemic, 
Russia’s war against 
Ukraine poses new 
challenges to the EU 
economy.  

Despite  entering  the  year  on  a  weak  note,  the  outlook  for  the  EU 
economy  before  the  outbreak  of  the  war  was  for  a  prolonged  and 
robust  expansionary  phase.  The  pandemic  situation  was  improving, 
while most of the headwinds posed by logistic and supply bottlenecks 
and  pressures  on  the  price  of  energy  and  other  commodities  were 
expected  to  fade  in  the  course  of  this  year.  Economic  activity  would 
continue  to  be  supported  by  an  improving  labour  market,  large 
the 
accumulated  savings,  favourable  financing  conditions  and 
deployment of the Recovery and Resilience Facility (RRF). The war has 
changed the picture,  by  bringing renewed  disruptions in  global supply, 
fuelling further commodity price pressures and heightening uncertainty. 
The EU is first in line among advanced economies to take a hit, due to 
its  geographical  proximity  to  Russia  and  Ukraine,  heavy  reliance  on 
imported  fossil  fuels,  especially  from  Russia,  and  high  integration  in 
global value chains.  Large inflows of people fleeing the war – as many 
as 5 million in the first 10  weeks since the start of the  war  –  pose a 
further organisational and coordination challenge for the EU.   

1 

rate202120222023202120222023202120222023202120222023202120222023Belgium6.22.01.83.27.81.96.35.85.60.6-1.1-0.6-5.5-5.0-4.4Germany2.91.62.43.26.53.13.63.33.27.26.16.5-3.7-2.5-1.0Estonia8.31.02.44.511.22.56.26.86.9-0.71.32.3-2.4-4.4-3.7Ireland13.55.44.42.46.13.16.24.65.014.312.813.1-1.9-0.50.4Greece8.33.53.10.66.31.914.713.713.1-8.3-8.4-6.4-7.4-4.3-1.0Spain5.14.03.43.06.31.814.813.413.01.01.82.1-6.9-4.9-4.4France7.03.11.82.14.93.17.97.67.6-2.4-3.0-2.0-6.5-4.6-3.2Italy6.62.41.91.95.92.39.59.58.92.51.21.6-7.2-5.5-4.3Cyprus5.52.33.52.35.22.77.57.87.3-7.2-8.8-7.2-1.7-0.3-0.2Latvia4.52.02.93.29.43.57.67.37.1-0.5-3.9-3.2-7.3-7.2-3.0Lithuania5.01.72.64.612.53.07.17.27.22.0-1.8-2.1-1.0-4.6-2.3Luxembourg6.92.22.73.56.82.35.35.25.17.55.95.50.9-0.10.1Malta9.44.24.00.74.52.63.53.63.64.11.91.9-8.0-5.6-4.6Netherlands5.03.31.62.87.42.74.24.04.29.58.78.7-2.5-2.7-2.1Austria4.53.91.92.86.03.06.25.04.8-0.5-1.0-0.8-5.9-3.1-1.5Portugal4.95.82.70.94.41.96.65.75.5-1.1-1.7-0.7-2.8-1.9-1.0Slovenia8.13.73.12.06.13.34.84.84.64.41.72.6-5.2-4.3-3.4Slovakia3.02.33.62.89.86.86.86.76.3-2.4-4.3-4.1-6.2-3.6-2.6Finland3.51.61.72.14.52.37.77.26.90.70.20.4-2.6-2.2-1.7Euro area5.42.72.32.66.12.77.77.37.03.22.42.9-5.1-3.7-2.5Bulgaria4.22.13.12.811.95.05.35.45.3-1.1-1.8-1.8-4.1-3.7-2.4Czechia3.31.92.73.311.74.52.82.62.6-2.3-3.7-3.8-5.9-4.3-3.9Denmark4.72.61.81.95.12.75.14.84.78.37.87.72.30.90.6Croatia10.23.43.02.76.12.87.66.36.03.31.70.3-2.9-2.3-1.8Hungary7.13.62.65.29.04.14.13.84.0-2.9-5.5-3.5-6.8-6.0-4.9Poland5.93.73.05.211.67.33.44.13.91.6-0.5-0.2-1.9-4.0-4.4Romania5.92.63.64.18.95.15.65.55.3-7.0-7.5-7.3-7.1-7.5-6.3Sweden4.82.31.42.75.33.08.87.87.05.54.85.8-0.2-0.50.5EU5.42.72.32.96.83.27.06.76.53.02.12.6-4.7-3.6-2.5United Kingdom7.43.41.62.57.03.64.54.04.0-2.6-4.6-4.9-8.3-3.9-2.3China8.14.65.0::::::2.11.61.1:::Japan1.71.91.8-0.21.61.52.82.72.63.42.52.6-7.6-6.5-4.1United States5.72.92.34.77.33.15.43.63.5-3.6-3.9-3.4-11.7-5.7-4.9World5.83.23.5::::::::::::Table 1:Overview - the spring 2022 forecastReal GDPInflationUnemploymentCurrent accountBudget balance 
 
 
           
 
 
European Economic Forecast, Spring 2022 

Against extreme 
uncertainty around the 
unfolding of the 
geopolitical situation, this 
forecast is underpinned by 
strong working 
assumptions.  

The outlook in the EU is 
now for lower growth and 
higher inflation, especially 
for 2022.  

The main hit to the global 
and EU economies comes 
through higher energy 
prices.  

2 

The ad-hoc assumptions underpinning the forecast are summarised in 
Box  I.1.1.  They  concern  the  duration  and  intensity  of  the  geopolitical 
tensions, as well as the size, distribution, labour market integration and 
budgetary impact of the inflows of people fleeing the war in Ukraine. In 
particular,  it  is  assumed  that  geopolitical  tensions  do  not  normalise 
before  the  end  of  the  forecast  horizon.  Furthermore,  while  COVID-19 
has significantly relaxed its grip on the EU economy, this is not the case 
in other parts of the world and risks of a resurgence of serious cases 
cannot be ruled out. The forecast rests on the assumption that COVID-
19  will  not  pose  significant  disruptions  to  economic  activity  in  the  EU 
over the forecast horizon. However, the EU economy remains indirectly 
exposed to pandemic developments in other regions.  

Real GDP growth in both the EU and the euro area is now expected at 
2.7% in 2022 and 2.3% in 2023, down from 4.0% and 2.8% (2.7% in 
the euro area), respectively, in the Winter 2022 interim forecast (WiF). 
The downgrade for 2022 must be read against the background of the 
growth  momentum  gathered  by  the  economy  in  spring  and  summer 
last year, which adds around 2 percentage points to the annual growth 
rate  for  this  year  (see  Box  I.2.1.).  Output  growth  within  the  year  has 
been reduced from 2.1% to just 0.8%. These revised growth projections 
imply slower convergence to the output level that the economy would 
have  attained  in  the  absence  of  the  pandemic  shock  –  based  on  an 
extrapolation  of  the  growth  outlook  from  the  last  forecast  preceding 
the pandemic. In turn, the  projection for inflation has been revised  up 
significantly.  In  the  EU,  HICP  inflation  is  now  expected  to  average  an 
all-time high of 6.8% in 2022, before declining to 3.2% in 2023. In the 
euro  area,  inflation  is  projected  at  6.1%  in  2022  and  2.7%  in  2023. 
This compares with 3.5% and 1.7%, respectively, in the WiF.  

Energy  commodity  prices  had  already  increased  substantially  before 
Russia’s  invasion,  from  the  lows  achieved  during  the  pandemic.  As 
supply  struggled  to  keep  up  with  the  strong  synchronised  rebound  in 
global activity, they surged well above pre-pandemic levels. In Europe, 
in  particular,  gas  and  electricity  have  been  trading  at  record  prices 
since  autumn  last  year.  Given  the  importance  of  Russia  as  a  major 
exporter  of  fossil  fuels,  uncertainty  about  supply  in  the  aftermath  of 
the war has brought renewed upward pressures on energy commodity 
prices,  amidst  heightened  volatility.  The  forecast  uses  the  indications 
coming  from  markets’  futures  curves  to  project  energy  inflation,  and 
does not factor in large-scale interruptions in the supply of oil and gas 
commodities,  as  by  its  cut-off  date,  there  were  no  such  supply 
stoppages. The model-based scenario analyses presented in Chapter 4 
highlights  the  importance  of  developments  in  energy  markets  for  the 
euro area. In the severe scenario of an outright cut in gas supply, GDP 
growth  rates  would  be  around  2½  and  1pps.  below  the  forecast 
baseline in 2022 and 2023, respectively, while inflation would increase 
3  pps.  in  2022  and  more  than  1  pps.  in  2023  above.  The  euro  area 
economy  would  still  manage  positive  annual  growth  rates  in  both 
forecast  years,  but  in  2022  economic  output  would  contract  on  a 
quarterly basis.  

 
 
Executive Summary 

Pressure on prices is 
broadening beyond 
energy…  

… curtailing households’ 
purchasing power, but a 
combination of factors 
support a further recovery 
in consumption.  

Investment growth is held 
back by rising costs and 
heightened uncertainty…  

… but is supported by the 
RFF and the need for 
frontloaded energy saving 
investment.  

Rising  input  costs,  notably  for  energy  and  fertilisers,  had  already 
started to put food commodity prices under pressure late last year. By 
putting at risk the production and export of grains, oil seeds and other 
agricultural  commodities,  for  which  Ukraine  and  Russia  are  key 
exporters,  the  war  has  intensified  the  pressures.  Similar  concerns 
pushed up the price of some industrial metals (e.g. nickel and copper), 
as  well  as  neon  gas  (a  key  input  for  semiconductors).  Furthermore, 
fresh  disruptions  in  logistics  and global  supply  chains  are  also  adding 
price  pressures  across  a  wide  range  of  industrial  goods.  Finally, 
notwithstanding a  projected  reduction in wholesale energy prices over 
the forecast horizon, accrued increases are set to keep passing through 
to  a  broad  range  of  goods  and  services.  Consequently,  core  inflation 
(i.e. inflation netted out of the more volatile energy and food prices) is 
set to be above 3% in both the euro area and the EU as a whole over 
the forecast horizon. 

Higher  energy  and  food  prices  reduce  households’  purchasing  power, 
especially  for  lower  income  families  who  spend  a  higher  fraction  of 
their  income  on  these  items.  Consumption  growth  paused  in  the  first 
quarter  of  the  year,  amidst  reinstated  pandemic  restrictions  and 
inflation surprises. As of the second quarter, reopening dynamics prop 
up consumption of services, with gradually fading vigour. A strong and 
still  improving  labour  market,  government  measures  to  offset  high 
energy prices and normalisation of households’ saving behaviour push 
the volume of consumption slightly above its pre-pandemic level by the 
end  of  this  year,  and  support  a  further  expansion  thereafter.  In  a 
context  of  high  inflation  and  falling  purchasing  power,  households 
devote a larger fraction of their disposable income to consumption: the 
savings rate is thus projected to fall in the EU from 17% last year to 
13.8% in 2022 and 12.5% in 2023, broadly the same rate recorded in 
2019.  The  large  amount  of  accumulated  savings  could  allow  for  a 
faster  recovery  of  consumption,  but  amid  heightened  uncertainty  and 
lower confidence, households may be reluctant to dig deeper into their 
savings.  Finally,  a  further  push  to  consumption  would  come  from 
people  fleeing  the  war,  who  are  expected  to  spend  part  of  the  social 
transfers granted to them by the host countries.   

The  inability  of  firms  to  fully  pass  on  higher  production  costs  to 
consumers  is  set  to  squeeze  corporate  profit  margins.  Heightened 
uncertainty  around  the  unfolding  of  the  geopolitical  situation  and  its 
impact  on  the  demand  outlook  are  set  to  weigh  on  companies’ 
investment  decisions  and  delay  the  realisation  of  investment  plans. 
Moreover,  as 
inflationary  pressures  has 
accelerated  the  pace  of  monetary  policy  normalisation,  financial 
conditions  are  tightening,  further  increasing  the  cost  of  financing  for 
firms.  Finally,  material  shortages  continue  constraining  investment 
from the supply side.  

the  strengthening  of 

At the same time, capital utilisation rates remain at record highs, while 
the full deployment of the RRF and the needed frontloading of energy-
saving  investment  in  the  context  of  REPower  EU  is  set  to  support 
construction  and  equipment  investment.  Overall,  the  outlook  for 
investment in the EU is subdued, as it is projected to grow by only 3.1% 
in  2022  –  much  of  which  (2  pps.)  is  being  carried  over  from  the 
rebound  in  investment  in  2021.  In  2023,  investment  is  expected  to 
recover momentum and expand by 3.6%.  

3 

 
European Economic Forecast, Spring 2022 

The outlook for external 
demand also weakens.  

The labour market entered 
the new crisis on a strong 
footing and is expected to 
improve slightly further.  

Growth of compensation 
of employees per head is 
expected to lag behind 
inflation this year.  

General government 
deficits continue declining 
in 2022 and 2023, despite 
energy-related measures 
and humanitarian 
assistance.  

4 

The  collapse  of  import  demand  in  the  EU’s  Eastern  neighbourhood 
weighs on EU exports, especially for those Member States with deeper 
trade relations with the region. Also, demand from the rest of the world 
is  negatively  affected  by  war-induced  surges  in  commodity  prices, 
disruptions  in  global  trade  and  tightening  global  financing  conditions. 
The  growth  forecast  for  the  global  economy  in  2022  has  been 
downgraded  by  more  than  1  percentage  point  compared  to  the 
previous  forecast.  Strict  COVID-19  containment  measures  applied  in 
parts  of  China  are  contributing  to  the  weaker  economic  outlook  for 
emerging  Asia,  with  impact  set  to  reverberate  globally  through 
additional bottlenecks in manufacturing. The deterioration of the global 
growth  outlook  is  shaving  off  a  significant  fraction  of  the  previously 
expected  growth in external  demand. Following a very strong rebound 
recorded in 2021, the volume of global (excl. the EU) imports of goods 
and services is now  forecast  to  grow  by  4.9% and  4.3%  in  2022  and 
2023, respectively.  

Last  year,  the  EU  economy  created  more  than  5.2  million  jobs  and 
attracted  nearly  3.5  million  more  people  into  the  labour  market.  With 
unemployment  rates  at  record-low  levels,  a  rapid  increase  in  unfilled 
vacancies and a growing share of managers reporting labour shortages 
as  a  factor  limiting  their  production,  labour  markets  in  the  EU  have 
tightened. This strong performance was broad-based across countries, 
sectors  and  socio-economic  groups,  with  the  exception  of  the  low 
skilled who are still lagging behind. Still, total hours worked and hours 
worked per employee in the fourth quarter of last year remained below 
their  pre-pandemic  levels  in  the  EU  and  most  Member  States.    Job 
creation  is  expected  to  ease  markedly  this  year,  amidst  signs  of 
attenuating  labour  shortages.  Unemployment  rates  are  forecast  to 
decline further, to 6.7% this year and 6.5% in 2023 in the EU. People 
fleeing  the  war  in  Ukraine  to  the  EU  are  expected  to  enter  labour 
markets gradually, with tangible effects only from next year. 

increasing  moderately  next  year.  Against 

In the EU, compensation of employees per head is forecast to increase 
by  3.9% this year and  3.6%  the  next.  As in  2021, these  growth  rates 
are  well  above  those  recorded  in  previous  years,  but  fall  short  of  the 
surge  in  inflation.  Consequently,  this  year  real  wages  are  expected  to 
decline,  before 
the 
background  of  soaring  production  costs  and  increased  economic 
uncertainty, concerns about job security rather than pay increases are 
likely to continue to have the upper hand in wage deals. Real household 
disposable income is set decrease by 2.8% in 2022, despite increased 
social  spending  to  support  people  fleeing  the  war  and  transfers  to 
offset high energy prices. In 2023 it is set to recover by around 1% in 
2023.  

From 4.7% of GDP in 2021, the general government deficit in the EU is 
forecast to fall to 3.6% of GDP in 2022, as temporary measures taken 
in  response  to  COVID-19  continue  to  be  unwound  and  economic 
expansion  improves  the  cyclical  components  of  the  budget.  These 
deficit-decreasing  factors  are  set  to  override  the  additional  costs  of 
measures  to  mitigate  the  impact  of  high  energy  prices  (0.6%  of  GDP 
for  the  EU)  and  to  deal  with  the  humanitarian  crisis  following  the 
invasion of Ukraine by Russia (0.1 % of GDP). The further drop in the 
deficit to 2.5% in the EU in 2023 is driven by the complete phasing out 
of temporary COVID-related  measures, the expected unwinding of the 

 
Executive Summary 

The balance of risks 
surrounding the forecast 
is skewed towards 
adverse outcomes. 

energy-related  measures  and  a  still  increasing  cyclical  component. 
Overall,  these  developments  imply  a  supportive  stance  in  2022, 
followed by normalisation in 2023. The debt-to-GDP ratio for the EU as 
a whole is set to decline to 85% of GDP by 2023, remaining above the 
pre-COVID-19 crisis level. 

realisation  of 

The unprecedented nature and size of the shocks ushered in by the war 
make  the  baseline  projections  presented  in  this  forecast  subject  to 
considerable  uncertainty.  The 
the  key  working 
assumptions  underpinning  them  –  regarding  the  evolution  of  the 
geopolitical situation and its reverberations in e.g. commodity markets 
and trade – is subject to high risks. Namely, further increases of import 
prices could strengthen the stagflationary forces unleashed by the war. 
Greater  than  expected  second  round  effects  could  amplify  them.  In 
addition,  strong  inflationary  pressures  could  lead  to  tighter  financial 
conditions than those  underpinning the forecast, with  negative impact 
on  domestic  demand  and  strains  on  public  budgets  and  the  banking 
sector.  A  stronger-than-expected  deceleration  of  economic  activity  in 
the US and China would further dent growth in the EU. Finally, COVID-
19 remains a risk factor. At the same time, private consumption could 
prove  more  resilient  to  increasing  prices  if  households  were  to  use 
more  of  their  savings  for  consumption.  Investments  fostered  by  the 
RRF could generate a stronger impulse to activity through e.g. stronger 
cross-sector  and  cross-country  spillovers.  Finally,  an  accelerated 
reduction  of  fossil  fuel  dependency  and  green  transition  could  reduce 
the negative impact of high energy prices faster than assumed.   

5 

 
PART I 
Economic outlook for EA and EU 

 
 
1.  SETTING THE SCENE 

The  Russian  invasion  of  Ukraine  forces  a 
reassessment  of  the  EU  and  global 
economic  outlook.  At  a  time  when  the  world 
economy  was  just  shaking  off  the  pandemic 
shock,  the  shocks  unleashed  by  the  war  are 
reverberating  across 
the  globe,  bringing 
renewed  disruptions  to  global  supply,  fuelling 
further  commodity  price  pressures,  tightening 
financial conditions and dampening consumers’ 
and  firms’  confidence,  (see  Table  I.1.1).  The 
collapse  of  demand  from  small,  but  not 
insignificant, trading partners in the East of the 
EU, inevitably places an additional strain on the 
EU  economy,  as  do  Russia’s  restrictions  to  its 
exports  of  some  key  raw  materials  to  the  EU. 
Supporting  the  large  flows  of  people  fleeing 
Ukraine 
is  also  a  big  organisational  and 
coordination  challenge  for  the  EU,  though  the 
inflow  of  additional  workforce  could  also  bring 
relief  to  increasingly  tight  labour  markets. 
Beyond 
consequences, 
immediate 
Russia’s  war  of  aggression  against  Ukraine  is 
leading  to  a  decoupling  from  Russia,  with 
fully 
consequences 
apprehend at this stage. This Chapter describes 
the channels through which the war affects the 
EU and global economy and the resulting policy 
challenges.  Chapter  2  analyses  how  these 
channels  are  projected  to  impact  the  EU 
economies. Chapter 3 and 4 discuss the risks to 
the  forecast  and  the  implications  of  their 
materialisation through scenario analysis.    

that  are  difficult 

these 

to 

relaxed 

The  reassessment  of  the  EU  economic 
outlook  has  to  rely  on  strong  working 
assumptions.  The  unprecedented  nature  and 
size  of  the  new  shocks  make  projections 
subject  to  considerable  uncertainty,  concerning 
the  evolution  of  the  geopolitical  situation,  but 
also  the  interaction  of  its  effects  on  the 
economy.  Furthermore,  while  COVID-19  has 
significantly 
the  EU 
economy, a resurgence of serious cases cannot 
be  ruled  out.  The  recent  drastic  pandemic 
containment  measures  applied  in  parts  of 
China  show  that  the  challenges  from  the 
pandemic  persist.  The  Spring  2022  Forecast  is 
therefore  underpinned  by  a  number  of  crucial 
assumptions  on  the  duration  and  intensity  of 
the  geopolitical  tensions;  the  size,  distribution, 
labour  market  integration  and  fiscal  costs  of 
the  inflow  of  people  fleeing  Ukraine;  and  the 

its  grip  on 

impact  of  the  pandemic  over  the  forecast 
horizon. These assumptions are set out in detail 
in Box I.1.1. 

the 

The  war 
pre-existing 
exacerbates 
headwinds  to  economic  expansion  in  the 
EU,  previously  expected  to  subside.  The 
in  economic  activity  that 
robust  rebound 
started  in  spring  last  year  brought  the  EU 
economy back to its pre-pandemic output level 
in  the  third  quarter  of  2021.  As  the  economy 
into  expansion,  the 
moved  from  recovery 
growth  momentum  was  further  dampened  by 
intensifying  headwinds.  The  resurgence  of  the 
pandemic  prompted 
reinstatement  of 
restrictions,  though  generally  of  a  milder  or 
more  targeted  nature  than  in  previous  waves. 
Persistent 
logistic  and  supply  bottlenecks 
weighed  on  production,  as  did  the  elevated 
prices  of  energy  and  other  commodities,  and 
labour  shortages 
in  many  EU  countries. 
However, economic activity looked set to regain 
traction  as  the  strain  on  the  economy  caused 
by the new wave of infections was expected to 
be  short  lived,  supply  conditions  were  set  to 
normalise  and 
to 
moderate.  A  continuously  improving  labour 
market,  large  accumulated  household  savings, 
favourable  financing  conditions  and  the  full 
deployment  of  the  Recovery  and  Resilience 
Facility  (RRF)  were  expected  to  sustain  a 
prolonged  and  robust  expansionary  phase. 
Russia’s  invasion  of  Ukraine  has  put  Europe 
back  into  extraordinary  economic  uncertainty, 
exacerbating 
challenges. 
pre-existing 
Significantly  higher  energy,  raw  materials  and 
food  prices,  together  with  aggravated  supply 
disruptions  are  directly  impacting  European 
societies,  affecting  economic  activity  and 
dampening households’ and firms’ confidence.  

inflationary  pressures 

The  relaxation  of  pandemic  restrictions 
lifts  growth  prospects  for  the  service 
sector.  In  the  course  of  2022,  many  of  the 
containment 
pandemic-related 
remaining 
measures  are  expected  to  be  gradually  lifted. 
Though  progressively  fading  out,  this  re-
opening momentum is set to benefit the service 
sector,  in  particular  contact-intensive  services. 
Several  survey  indicators  point  to  resilience  or 
even  improvement  in  confidence  in  services, 
compared  to  that  in  manufacturing,  a  sector 

9 

  
European Economic Forecast, Spring 2022 

that  is  stressed  by  rising  input  costs  and 
persistent  supply  bottlenecks.  These  dynamics 
mark  a  notable  reversal  of  fortunes  between 
service-driven  economies  and  economies  that 
feature a larger manufacturing sector.   

Last 

year, 

prices. 

conditions 

idiosyncratic  shocks, 

The main impact of the war on the global 
is  through  energy 
and  EU  economy 
commodity 
the 
synchronised rebound in global activity led to a 
strong  recovery  in  energy  prices,  from  the  low 
levels  recorded  during  the  pandemic.  By  the 
end  of  the  year,  however,  energy  prices  were 
well  above  pre-pandemic  levels  as  supply 
struggled  to  keep  up  with  surging  demand.  In 
Europe,  the  situation  was  exacerbated  by  a 
including 
number  of 
unfavourable  weather 
hitting 
renewable  energy  generation  and  record  low 
gas storage levels in European storing facilities. 
The  war  has 
renewed  upward 
pressures  on  energy  commodity  prices,  given 
the importance of Russia as one of the world’s 
largest  exporters  of  fossil  fuels.  It  has  also 
generated  heightened  price  volatility.  Oil 
markets  reacted  to  news  of  the  withdrawal  of 
important  Western  oil  companies  from  Russia, 
imports  by  some 
the  boycott  of  energy 
countries  (e.g.  the  US  and  the  UK),  and  the 
decisions  of  the  US  to  release  part  of  its  oil 
reserves  and  of  OPEC  not  to  increase  oil 
production.  Upward  price  pressures  and 
volatility in the European gas market were even 
larger, amid supply concerns.  

triggered 

on 

Benefits  of  reducing  the  EU’s  energy 
dependency, 
Russia, 
especially 
outweigh  costs.  The  current  high  energy 
prices  highlight  the  need  to  strengthen  energy 
security  in  the  EU.  In  March,  the  Commission 
announced the REPowerEU plan,(1) with the goal 
to  reduce  EU  demand  for  Russian  gas  by  two 
thirds  before  the  end  of  the  year,  and  to  gain 
independence  from  Russian  fossil  fuels  by 
2027.  In  the  short-term,  diversification  away 
from  Russia  and  fossil  fuels  more  broadly  will 
be costly. Diversification of supply sources and 
frontloading  of  investment  to  accelerate  the 
green  transition  and  reduce  energy  demand 
(e.g.  energy  efficiency)  may  add  to  cost 
pressures. In turn, rising energy prices increase 

(1)    https://ec.europa.eu/commission/presscorner/detail/en/ip

22_1511 

10 

production  costs  and  lower  labour  productivity 
(output  per  worker).(2)  However,  these  short-
term  cost  pressures  must  be  weighed  against 
the  costs  of  potential 
large-scale  supply 
interruptions, especially at a juncture when high 
fossil fuel prices make alternative technologies 
cheaper.  

fossil 

imports  with 

The  acceleration  of  decarbonisation  will 
have  implications  for  the  EU  economy  in 
the  longer  term.    In  the  medium  term,  the 
substitution  of 
less 
expensive  renewable  sources  of  energy  will 
reverse  the  terms  of  trade  shock  that  is 
currently  hitting  the  EU  economy.  Capital 
investments 
low-emission 
technologies and green innovation are expected 
to spur total factor productivity growth, though 
this  effect  is  unlikely  to  play  out  already  over 
the  forecast  horizon.  At  the  same  time,  the 
accelerated 
low-emission 
technologies may make skills in specific sectors 
increasingly obsolete. 

implement 

transition 

to 

to 

the 

the 

large-scale 
of 

Phasing  out  Russian  fossil  fuels  imports 
could  be  complicated  by  gas  supply 
shortages. By the cut-off date of this forecast, 
the  supply  of  oil  and  gas  had  not  been 
interruption. 
disrupted  by  any 
However, 
risk 
probability 
materialising was possibly already contributing 
to  the  high  price  pressures  and  volatility  for 
these  commodities.  At  the  time  of  writing  this 
report,  the  EU  was  discussing  a  sixth  package 
of  sanctions 
that  would,  among  other 
measures,  ban  imports  of  Russian  oil.  With  a 
few  exceptions,  sources  of  oil  imports  are 
assessed  to  be  substitutable  due  to  the 
relatively  expandable  production  and  flexible 
transportation  modes  of  oil.  Substituting 
Russian  oil  would  be  manageable  for  the 
majority of Member States, but could result in a 
further upward shift in prices. Gas supply relies 
on less flexible infrastructure. An outright cut in 
gas  supply,  either  through  import  bans  by  the 

(2) 

In  a  simplified  growth  model,  re-sourcing  of  energy 
away  from  fossil  sources  translates  into  temporarily 
stronger  capital  stock  depreciation  (obsolescence  of 
fuel-specific  capital)  and  lower  production  efficiency 
(higher  energy  input  costs).  Acceleration  of  the  exit 
from  fossil  fuels  frontloads  capital  obsolescence  and 
amplifies  productivity 
lower  capital 
intensity.  E.g.,  Bayer,  Ch.,  Kriwoluzky,  A.,  Seyrich,  F., 
Stopp  russischer  Energieeinfuhren  würde  deutsche 
Wirtschaft  spürbar  treffen,  Fiskalpolitik  wäre  in  der 
Verantwortung, DIW aktuell 80, 2022. 

losses  from 

 
                                                        
 
                                                        
Economic outlook for EA and EU 

EU  or  retaliatory  measures  by  Russia,  as  has 
already been the case for Poland and Bulgaria, 
would result in a much more costly adjustment 
process.  Chapter  4  presents  the  results  of 
model-based  scenario  analyses.  A  severe 
scenario sheds light on the potential impact of 
a large-scale cut in gas supplies.  

The prices of agricultural commodities and 
some  industrial  metals  are  also  under 
intensified  pressure.  Climate  change  and 
rising  prices  of  inputs,  notably  for  energy  and 
fertilisers,  had  already  started  to  put  food 
commodity  prices  under  pressure.  The  Russian 
invasion  of  Ukraine  has  added  a  layer  of 
instability  to  already  tense  markets  and  has 
generated  uncertainty  regarding  supply,  given 
that  both  countries  are  major  exporters  of 
grains,  oilseeds  and  vegetable  oils.  This 
situation  raises  serious  concerns  about  food 
security  in  developing  and  least  developed 
countries  that  are  dependent  on  food  imports. 
The EU is largely self-sufficient for food, with a 
large  surplus  in  trade  of  agri-food  products. 
The  EU  single  market  can  once  again  be 

expected to prove its ability to absorb shocks.(3) 
Nevertheless,  there  are  concerns  regarding 
affordability,  due  to  high  market  prices  and 
pipeline  inflationary  pressures.  Finally,  Russia, 
and to a lesser extent Ukraine, play key roles in 
the  global  production  and  export  of  raw 
materials such as neon, palladium, nickel, wood, 
ammonium nitrate and aluminium. War induced 
disruptions in the supply of these commodities 
compound  with  Russia’s  export  bans  on  some 
raw materials, including timber.  

The collapse of trade with Russia, Belarus 
and  Ukraine  adds  to  negative  spillover 
effects  on  global  demand.  The  size  of  the 
Russian economy is about 10% that of the  EU 
and  trade  between  the  two  is  relatively  small. 
The  size  of  the  economy  of  Ukraine  is  much 
smaller.  This  limits  the  macroeconomic  impact 
of  the  disruptions  to  the  trade  of  goods  and 
services caused by the economic sanctions, the 
expected  deterioration  of 
the  economic 
in  Russia  and  Ukraine,  and  the 
situation 
unwinding of economic integration between the 
EU and Russia, either as a result of government 

(3)  See  Commission  Communication:  Safeguarding-food-
security-reinforcing-resilience-food-systems.pdf 
(europa.eu) 

11 

Table I.1.1:Economic impact of the Russian invasion of Ukraine on the EU Observed impactExpected impact in 2022-2023 (Spring forecast) Potential longer-term impactSurge in energy and food commodity prices, pushing up producer and retail pricesDampened domestic demand Distributional impact (low income households most hit)Sectoral reallocation away from energy-intensive sectorsTerms-of-trade deterioration Disruption in production processesAccelerated decarbonisation Budgetary impact of mitigation policiesFrontloaded investment in energy saving and renewablesBroadening inflationary pressures Slower global growth and external demand Weaker  global growth and slower  external demand Higher costs of foreign trade Unwinding of EU-RU integrationFalling trade with region at warRenewed supply and logistic disruptions Reorganisation of global supply chains / relocation of productionMore important role for the EU's internal marketDisruption in production processesMore resilient production structuresRepricing of financial assets, tighter financing conditionsFurther  normalisation of monetary conditionsPressure on banks with RU exposureIncreased market volatilityWeaker business and consumer confidenceIncreased risk aversionIncreased uncertaintyBudgetary impact of  support/to integrationProgressive entry into the labour market Increase in consmptionInflow of people fleeing the war Increased public spending for emergency supportMore substantial increase in labour supply Commodity marketsGlobal growth and tradeSupply chains and logisticsPartial reversal of globalisation gainsFinancial marketsFragmentation of payment system Economic sentiment / uncertaintyLower private consumption and investment  
                                                        
 
 
  
 
 
European Economic Forecast, Spring 2022 

or corporates’ action.  Member States in Central 
and  Eastern  Europe  are  however  expected  to 
their 
take  a  more  significant  hit,  given 
geographical  proximity  and  historically  closer 
commercial  links  to  the  conflict  region.  Also, 
with  the  exception  of  a  few  commodity 
exporters,  demand  from  the  rest  of  world  will 
be  negatively  affected  by  the  war-induced 
surge  in  commodity  prices  and  the  tightening 
of  financial  conditions  in  response  to  rising 
inflationary pressures.  

of 

signs 

Following 
post-pandemic 
normalisation, the war is causing renewed 
stress on global logistics and value chains. 
Shipping  lines  have  suspended  bookings  of 
container  transport  with  Russia.  Air  cargo 
capacity  is  hampered  by  the  reciprocal  ban  on 
Russian  and  European  air  space.  Rail  lines 
connecting  Asia  and  Europe  are  now  less 
secure. Disruptions in logistics increase delivery 
times and push up global transport costs. Costs 
of  foreign  trade  are  also  increasing  due  to  a 
surge  in  risk  premiums  of  insurance  coverage 
and  rising  costs  of  financial  transactions  and 
litigation.  All  this,  compounded  with  new 
disruptions in the supply of key inputs and raw 
materials, causes new disorders in global value 
chains and pushes further out the time horizon 
for  a  full  normalisation  of  supply  conditions. 
China’s  ultra-strict  pandemic  containment 
these  war-induced 
to 
strategy 
pressures.  As  a  result,  for  example,  several 
carmakers in the EU are cut off from the supply 
of  key  parts, 
including  wire  harnesses 
manufactured in Ukraine where assembly lines 
stopped.  Similarly,  Ukraine  supplies  about  half 
of the neon gas used to produce semiconductor 
chips.  Governments  and  large  corporations  are 
now scrambling to obtain alternative supplies. 

is  adding 

the  global 

The  war  may  reverse  some  of  the 
globalisation  gains  achieved  over  past 
supply 
decades.  Some  of 
disruptions  described  above  are  set  to  be 
permanent.  In  the  EU  and  other  advanced 
economies some reshoring efforts had already 
been gaining momentum after the outbreak of 
the  pandemic.  Following  Russia’s  aggressive 
stance  and 
the  potential  emergence  of 
competing blocks of alliances, these efforts are 
likely  to  be  intensified.  These  developments, 
however, will only play a marginal role over the 
forecast  horizon.  Yet,  the  risk  of  large  scale 
increased.  The 
deglobalisation  has  clearly 

12 

restructuring of global economic linkages could 
partially reverse globalisation gains, with fewer 
international 
from 
productivity  gains 
division  of 
technology 
labour  and 
spillovers,  as  well  as  higher  import  prices  and 
lower potential output.  

the 
less 

resilience, 

The  negative  impact  of  deglobalisation 
may  be  partially  offset  by  deepening  the 
Single  Market.  Whereas  some 
targeted 
reshoring  could  deliver some  benefits  in  terms 
of  economic 
the  prospect  of 
deglobalisation  is  net  negative  for  the  EU. 
Having  built  much  of  its  prosperity  and  its 
geopolitical  influence  on  open  trade  and  the 
attractiveness of its 450-million-strong market, 
the EU is set to lose more than other advanced 
economies  from  the  progressive  unwinding  of 
global  value  chains  and  the  fragmentation  of 
trade.  A  renewed  impetus  in  completing  the 
Single Market, especially in the area of services, 
could  offset 
costs  of 
some  of 
deglobalisation.  

the 

The EU and global financial conditions are 
tightening as a result of valuation effects 
and  changes  in  the  monetary  stance. 
Although  countries  and  market  segments  with 
a large financial exposure to Russia – including 
some  non-euro  area  EU  Member  States  –  are 
likely  to  be  significantly  penalised,  the  EU 
financial  system  exposure  to  Russia  and 
Ukraine  is  relatively  small.    The  war  has 
however  led  to  increased  market  volatility, 
repricing  of  risks  fall  of  stock  indices  and 
exacerbated inflationary pressures, leading to a 
faster  and/or  stronger  monetary  tightening 
than  previously  expected.  Emerging  market 
economies  are  additionally  penalised  by 
investors  seeking  safer  havens.  All  this  is 
resulting  in  a  substantial  tightening  in  global 
and  EU  financial  conditions.  Beyond  these 
short-term movements, the war is set to result 
in a persistent upward shift in funding costs. In 
a  context  of  heightened  geopolitical  tensions, 
markets are set to demand a higher return for 
a  greater  perceived  policy  risk  of  holding  EU 
assets. Moreover, in an effort to limit potential 
vulnerabilities, some central banks could divest 
from  current  holdings  in  reserve  currencies, 
including  the  euro,  while  a  more  fragmented 
payment 
increase 
infrastructure  would 
transaction costs. 

 
Economic outlook for EA and EU 

Rapidly increasing prices are set to curtail 
households’ real incomes. Higher energy and 

food  prices  weigh  on  purchasing  power, 
especially  for  lower  income  households  that 

13 

Box I.1.1: Key assumptions concerning the forecastGiven the high uncertainty over the unfolding of events, the Spring Forecast has to rely heavily on ad-hoc assumptions for forecasting purposes. For the customary technical assumptions underpinning the forecast, see Box I.5.1.  Russian invasion of Ukraine and geopolitical tensions. The magnitude of the economic impact of the war is highly uncertain and depends crucially on its duration. The central scenario for the forecast of the global and EU economies assumes that geopolitical tensions will not normalise before the end of the forecast horizon. All sanctions against Russia stipulated until the cut-off date of the forecast (1), including those already implemented after Russia’s annexation of Crimea in 2014 (2), are assumed to remain in place throughout the forecast horizon. For Ukraine, a specific working assumption is made that economic activity remains unchanged in 2023 compared to 2022. (3)  People fleeing the war in Ukraine to the EU. Assumptions on people fleeing Ukraine concern: cumulative net inflows into the EU in 2022 and 2023; their distribution across Member States; their integration in the labour market; and the associated fiscal costs for Member States. In a nutshell:  The number of people fleeing the war in Ukraine to the EU would  gradually reach 6                                                            (1) For the EU, these sanctions are reported by the Council. For non-EU sanctions, the Brookings Sanctions Tracker provides detailed information. (2) Sanctions already implemented after Russia’s annexation of Crimea in 2014 have an end date (currently extended until June 2022), which is assumed to be extended at least until the end of the forecast horizon. (3) Note that the IMF also assumes sanctions to remain in place over the forecast horizon of the WEO. Staff expect a contraction in Ukraine’s GDP in the order of 35% but did not produce a forecast for Ukraine for 2023. The ECB assumed that (i) there would be no further escalation of the war; (ii) over time there will be a resolution of the conflict but has not specified when this resolution would take place. Finally, no assumption was made on refugees. Forecasts for Ukraine by professional forecasters included in the March 2022 report of Consensus Economics vary markedly (e.g. GDP growth in 2022 between -15.0% and -46.5%, and in 2023 between -6.5% and +70%). million by the end of 2022, and stay stable over 2023.  Their geographical distribution is projected using four determinants with equal weights: (1) the distribution of Ukrainian immigrants in the EU in 2021; (2) the distribution of flows of Ukrainian immigrants by country over recent years (2015-20); (3) the relative population of Member States; and (4) the actual distribution of people fleeing Ukraine across the EU as of March 23 2022 (as estimated by DG HOME based on information provided by Member States).  The employment rate of those arriving from Ukraine who are of working age increases from 8% (on average) in 2022 to 20% (on average) in 2023.   Gross annual fiscal costs per person have been estimated based on EUROMOD, the tax-benefit microsimulation tool for the EU, for each Member State. (4)  Fiscal estimates take into account that some of those arriving will take up work and that labour market behavior of Ukrainian nationals may resemble that of EU mobile workers.   The COVID-19 pandemic.  Overall, as in the Winter 2022 interim Forecast, the Spring Forecast assumes that the pandemic will not cause any major disruptions in the EU economy over the forecast horizon. However, absenteeism could continue to weigh on production for a few more months and uncertainty over the future evolution of the pandemic, including possible new shocks to labour supply, remains significant.For China, it is assumed that the current “dynamic Zero-COVID” policy is continued throughout the forecast horizon.                                                            (4) Calculations are based on the methodology described by Christl M., Bélanger A., Conte A., Mazza J. & Narazani E. (2021), The fiscal impact of immigration in the EU, JRC Working Papers on Taxation and Structural Reforms No 01/2021, European Commission, Joint Research Centre, Seville.   
 
 
   
 
 
European Economic Forecast, Spring 2022 

spend  a  higher  fraction  of  their  income  on 
these items. Moreover,  high  energy prices tend 
to  be  passed  through  to  a  broader  array  of 
intermediary inputs and eventually to consumer 
goods.  The  higher  cost  of  energy  and  non-
energy  imports  is  affecting  both  firms  and 
workers.  Firms  face  the  perspective  of  falling 
real margins, as most of them will not be able 
to  pass-on  higher  production  costs.  Wage 
increases  are 
to  fully 
compensate  for  the  rising  costs  of  living.  This 
consideration  has  led  many  Member  States  to 
delay  adjustments  of  retail  energy  prices 
and/or partially offset the increased energy bill 
of  households  and  energy  intensive  firms  with 
non-negligible budgetary effects.  

therefore  unlikely 

Rising  production  and  financing  costs 
coupled  with  negative  confidence  effects 
are  set  to  weigh  on  investment.  The  rising 
costs  of  energy  and  non-energy  commodities, 
increase 
and  disruption 
companies'  production  costs,  especially 
in 
manufacturing,  transport  and  agriculture.  The 
resulting  compression 
in  profit  margins, 
coupled  with  tightening  financing  conditions 
and  negative  confidence  effects  is  set  delay 
corporate investment decisions.  

in  supply  chains 

still 

support 

tailwinds 

Strong 
the 
economy.  Following  large  accumulation  of 
savings  during  the  pandemic,  households  may 
be  keen  to  devote  a  larger  fraction  of  their 
disposable income to consumption despite high 
uncertainty.  A  gradual  convergence  of  the 
saving  rate  to  pre-pandemic  level  would  allow 
smoothening the inflationary shock and fuelling 
consumption,  especially  in  a  context  in  which 
restrain 
containment  measures  no 
services. 
on 
spending 
Moreover,  an  exceptionally  strong 
labour 
market,  with  historically  low  unemployment 
rates and high participation rates, broadens the 
gains  in  labour  income.  Moving  to  investment, 
capacity  utilisation  remains  at  historically  high 
levels  and  the  full  deployment  of  the  RRF 
provides  an  incentive  to  firms  and  households 
for  frontloading  energy-saving  equipment  and 
construction investment. 

contact-intensive 

longer 

Supporting  large  flows  of  people  fleeing 
Ukraine  is  a  challenge  for  the  receiving 
Member States and the EU as a whole, but 
also  provides  opportunities.  The  immediate 
reception and protection needs of a large wave 

14 

States,  mainly 

of  displaced  persons  from  Ukraine  pose  a 
challenge for the organisational capacity of the 
the 
receiving  Member 
neighbouring  ones,  and  generate  costs.  The 
activation of the Temporary Protection Directive 
for at  least  one  year grants  these  persons  the 
right  to  stay  in  the  EU,  as  well  as  access  to 
education  and 
labour  market, 
training, 
healthcare,  housing  and  social  welfare.  Over 
time,  an 
increasing  number  of  displaced 
persons  is  expected  to  start  working,  bringing 
relief  to  the  EU’s  tight  labour  markets,  and 
pushing down public spending. 

The  shocks  unleashed  by  the  war  differ 
substantially from those of the pandemic, 
confronting  policy  makers  with  difficult 
policy trade-offs. First, the pandemic caused 
a  deep  contraction  in  economic  activity  and 
squeezed  inflation  well  below  central  banks’ 
target (and the euro area even recorded several 
months of falling average price level). For much 
of  the  past  two  years,  monetary  and  fiscal 
policy  moved  in  the  same  direction,  protecting 
aggregate  demand  and  employment,  thereby 
safeguarding  price  stability.  The  Russian 
invasion  of  Ukraine  has  unleashed  shocks  that 
primarily  weigh  on  supply,  though  with  ripple 
effects  on  demand  (through  lower  confidence 
and lower global demand). These supply shocks 
exert  a  drag  on  output  growth  while  pushing 
inflation  further  up  to  rates  never  seen  since 
the  introduction  of  the  single  currency.  In  this 
context,  macroeconomic  policies  have  to  tread 
a  narrow  line  between  keeping  inflation  in 
check and accommodating the expected decline 
in demand.   Second, the  pandemic was largely 
temporary  shock,  especially  as  policy 
a 
effectively 
long-lasting  effects. 
its 
Policy  response,  especially  at  Member  States, 
has aimed at preventing excessive dislocations, 
also  through  an  extended  use  of  job  retention 
schemes.  In  contrast, the  war  has exacerbated 
a  terms  of  trade  shock  for  the  EU  economy, 
where  the  value  of  what  it  produces  and 
exports  is  lower  than  the  value  of  its  imports. 
This  trend  is  expected  to  continue  in  the 
foreseeable  future  as  the  war  repercussions 
endure.  At EU level, the objectives of the twin 
transition  are  therefore  as  relevant  as  ever. 
Member  States,  on  their  side,  can  accompany 
the  adjustment  process  by 
frontloading 
investments  and  structural  reforms  that  will 
reduce dependence on Russian imports of fossil 
the 
fuels 

eventually 

accelerate 

limited 

and 

 
Economic outlook for EA and EU 

process  while 

decarbonisation 
boosting 
productivity  through  digitalisation.  In  facing 
these  new  challenges,  governments  must  pay 
renewed attention to distributional aspects.  

While  softening  the  impact  of  rising  energy 
prices  on  vulnerable  households  and  energy 
intensive  industries,  they  have  to  preserve 
incentives to diminish energy consumption and 
ensure  public  finances  remain  on  a  track  of 
long-term sustainability. 

15 

 
 
  
2.  ECONOMIC OUTLOOK 

2.1. 

INTERNATIONAL ENVIRONMENT 

The  global  economy  retained  positive 
momentum  in  late  2021,  despite  sharply 
rising  inflation.  The  global  economy  grew  at 
around 1.8% quarter-on-quarter in 2021-Q4, a 
similar pace to the previous quarter (see Graph 
I.2.1).  Among  advanced  economies  (AEs),  the 
US, Canada, UK, and Japan all saw a pick-up in 
growth  as  the  Delta  wave  receded,  while 
among  emerging  markets  and  developing 
economies (EMEs) there were strong outturns in 
China,  Turkey,  South  Africa  and  Russia.  The 
growth  momentum  continued  to  be  weaker  in 
Latin  America  though  Brazil  saw  a  return  to 
positive  growth  in  the  fourth  quarter.  Overall, 
the global economy is expected to have grown 
by  5.7%  in  2021,  after  contracting  by  3.3%  in 
2020,  with  most  G20  economies  now  having 
regained their pre-pandemic (end 2019) output 
levels,  and  several  even  surpassed  them  (e.g. 
China, US).  Global trade in  goods strengthened 
across  both  AEs  and  EMEs  during  the  fourth 
quarter  of  2021,  and  was  around  9%  above 
pre-pandemic  (end  2019)  levels  at  the  end  of 
2021  (CPB  data).  Monthly  data  from  the  WTO 
also  suggests  that  services  trade  is  likely  to 
have  regained  pre-pandemic  levels  in  late 
2021,  though  travel  and  tourism  services 
remained  subdued,  notably 
in  Asia.  Total 
growth  in  global  imports  is  estimated  to  have 
been  10.5%  in  2021,  after  a  fall  of  8.4%  in 
2020.  Global  inflation  rates  rose  throughout 
2021  as  strong  demand  for  goods,  rising 
energy  costs,  and  pandemic-induced  supply-
side  bottlenecks  interacted.  Labour  markets  in 
some  advanced  economies  (e.g.  US,  Canada, 
UK)  are  now  tight,  with  unemployment  rates 
close to pre-pandemic levels. 

The  positive  momentum  carried  over  into 
early  2022,  particularly 
in  advanced 
economies.  Global  industrial  production  rose 
by  4%  3m-o-3m  February.  For  advanced 
economies,  the  manufacturing  PMI  remained 
well  in  expansionary  territory  also  in  March.  
Services  PMIs  for  many  advanced  economies 
were also strong in February and March, as the 
Omicron  wave  faded  and  restrictions  were 
significantly  relaxed.  Manufacturing  PMIs  for 
EMEs  were  noticeably  weaker,  falling  into 

contractionary  territory  in  February  and  March. 
In  addition,  the  global  services  PMI  for  EMEs 
dropped very sharply in March to well below 50, 
largely  reflecting  the  impact  of  COVID-linked 
lockdowns in China.  

logistic  and 

The  Russian 
invasion  of  Ukraine  has 
imparted  a  major  shock  to  the  global 
economy.  Aside  from  the  direct  impact  on 
Ukraine and Russia, the disruption to supply of 
materials  critical  to  industrial  processes  (e.g. 
palladium,  neon)  are  adding  to  pandemic-
induced 
supply  bottlenecks. 
Meanwhile,  global financial  markets have  seen 
sharp  downward  adjustments  in  equity  prices, 
widening  credit  spreads,  and  a  steep  rise  in 
bond  yields,  with  higher  inflation  leading  to 
expectations  of  an  accelerated  monetary 
tightening  cycle.  Higher  commodity  prices 
provide a windfall to commodity producers, but 
result  in  a  substantial  negative  terms  of  trade 
shock  elsewhere.  Terms  of  trade  deterioration 
further  softens  global  demand  and  lowers 
growth  potential,  while  adding  to  inflationary 
pressures.  

Upside  pressures  to  the  price  of  energy 
and  many  non-energy  commodities  have 
intensified  with  the  war  in  Ukraine.  In 
2021, oil prices  more than recovered from the 
pandemic-induced slump in spring 2020, on the 
back  of  rising  global  demand,  low  inventory 
levels  and  limited  supply  growth  from  OPEC+ 
as from autumn 2021. OPEC still has around 3 
million bbl/d spare capacity, down from 9 mb/d 
in  the  middle  of  2020  and  4.6  mb/d  in 
December  2021,  but  mostly  in  Saudi  Arabia 

17 

30354045505560657075-8-6-4-202468101819202122q-o-q%Graph I.2.1: Growth in global GDP and global PMIsGDP contribution emerging marketsGDP contribution advanced economiesGlobal manufacturing PMI (rhs)Global services PMI (rhs)Sources: OECD, IMF and national sources for GDP, S&P Global for PMIindex > 50 = expansion  
   
European Economic Forecast, Spring 2022 

and the United Arab Emirates, both unwilling to 
raise  production.  Prices  in  early  2022  were 
close  to  their  2018  and  2019  average  at 
around 70 USD/bbl, but are now forecast to be 
at 103.6 USD/bbl in 2022 and at 93.5 USD/bbl 
in  2023.  Prices  for  natural  gas  have  also 
increased  sharply,  particularly  in  Europe,  with 
the average benchmark price in end-April 2022 
up  420.1%  for  the  European  TTF  vs.  148.5% 
for  the  US  Henry  Hub  since  the  beginning  of 
2021  (see  Graph  I.2.2).  Metal  prices  have  also 
risen, reflecting long-term underinvestment and 
high  energy  prices  that  raise  production  costs, 
but  also  insecurity  about  Russia´s  future  role 
as  a  supplier.  Last,  but  not  least,  food  prices 
have  also  increased,  with  both  Russia  and 
Ukraine  being 
large  exporters  of  wheat, 
oilseeds  and  vegetable  oils,  while  droughts  in 
South-America  have  additionally 
restricted 
supply.  

invasion  of  Ukraine 

The  Russian 
is 
creating  fresh  disruptions  to  global  value 
chains  and  shifting  trade  towards  less 
efficient  routes.  Recent  indicators  point  to  a 
renewed  worsening  of  supply  chain  delays. 
Transport  costs  have  also  been  increasing 
across all modes of transportation. The closure 
of  Russian  airspace  has  a  critical  impact  on 
Europe-Asia  freight 
routes  and  air  fares 
between  Asia  and  Europe  increased  by  30% 
during  March.  The  airspace  ban  also  affects 
trans-Pacific  air  routes,  as  the  preferred  route 
connecting North Asia to North America passes 
over  Russian  territory. 
invasion  has 
additionally led to the closure of shipping ports 
around the Black Sea, halting the cargo vessels 
in  that  area  and  adding  to  logistical  logjams. 

  The 

the  major  global 

Furthermore, 
shipping 
companies  have  suspended  their  shipments  to 
Russia.  These  events  are  generating  further 
pile-ups  at  origin  ports 
in  Europe  and 
elsewhere,  and  increasing  cargo  volumes  at 
lieu  of  Russian 
regional  hubs  used 
in 
is  being  diverted 
destinations.  Rail  traffic 
mainly  to  the  “middle  corridor”  that  runs 
through Kazakhstan, Azerbaijan and Georgia to 
Turkey. These alternative routes, however, take 
longer  and  will  lead  to  longer  delivery  times, 
increases in shipping costs and some diversion 
from  rail  to  sea  shipping.  The  Russia-Ukraine 
war  has  had  an  immediate  impact  on  trade 
flows, with the Kiel trade indicator registering a 
2.8%  decline  in  world  trade  between  February 
and March. 

Bottlenecks 
to  global  manufacturing 
caused  by  China’s  “dynamic”  zero  COVID-
19  policy  are  adding  to  the  disruptions 
from  the  war.  The  virulence  of  the  Omicron 
variant  led  to  a  sharp  spike  in  cases  in  early 
2022  in  the  US,  UK  and  South  America  in 
particular,  which  however  receded  rapidly  in 
February.  While  the  economic  impact  of  the 
Omicron variant in Europe and the Americas has 
so far been limited, the impact in Asia has been 
more  substantial.  In  China,  the  virus  became 
widespread  in  March,  with  the  incidence  in 
Shanghai soaring to above 25,000 daily cases in 
April.  The  new  virus  outbreak  together  with  the 
“dynamic”  zero  tolerance  approach  has  led  to 
generalised  lockdowns  across  Chinese  cities, 
including  the  key  economic  hubs  of  Shenzhen 
to  congestion  and 
and  Shanghai,  adding 
tightening supply bottlenecks.   

18 

122.932.275.275.246.5050100150AluminumNickelLeadZincCopperMetals compositeGraph I.2.2b:Basic metals' pricessince 1 Jan 2021 to 23 Feb 2022Since 23 February 2022% change, EURSource::Standard & Poor's/Goldman Sachs , ECB 91.943.949.6113.3117.095.7101.614.881.0-54595145WheatSugarSoybeansKansas WheatCottonCornCoffeeCocoaAgriculture compositeGraph I.2.2c:Agricultural commodities' pricessince 1 Jan 2021 to 23 Feb 2022Since 23 February 2022% change, EURSource: Standard & Poor's/Goldman Sachs,ECB 420.1 257.4 148.5 444.7 0200400600Naturalgas - TTF(Europe)Naturalgas - Henryhub (US)Brent oilCoalGraph I.2.2a:Energy commodities' pricessince 1 Jan 2021 to 23 Feb 2022Since 23 February 2022% change, EURSource::Commodity Research Bureau, ICE, NYMEX, ECB  
  
Economic outlook for EA and EU 

Continued strengthening of the US dollar would 
also  weigh  on  exports  and  widen  the  trade 
deficit  (to  3.7%  of  GDP  in  2022).  US  GDP  is 
now  expected  to  expand  by  2.9%  in  2022  and 
2.3% in 2023, while inflation is set to move up 
to 7.3% before retreating to 3.1% in 2023. 

to 

Among  other  advanced  economies,  the 
outlook  shows  significant  variation.  UK 
GDP grew strongly in the last quarter or 2021, 
and  momentum  continued  into  early  2022  as 
pandemic restrictions were lifted. Higher energy 
prices  and  fiscal  tightening  are,  however, 
expected  to  substantially  erode  disposable 
incomes  in  2022,  while  business  investment  is 
remain  sluggish  despite  generous 
set 
temporary  tax 
is  now 
incentives.  The  UK 
expected to grow by 3.4% in 2022 and 1.6% in 
inflation  at  7.0%  and  3.6% 
2023,  with 
respectively. In Japan real GDP is now forecast 
to increase by 1.9% in 2022, with a significant 
drag  from  the  Omicron  variant  in  the  first 
quarter  of  2022,  and  to  edge  down  to  1.8% 
growth in 2023 as the economy moves towards 
potential.  Price  pressures  have  increased  in 
Japan,  though  headline  inflation  remains  at 
relatively 
to  other 
advanced economies. It is expected to be 1.6% 
in  2022  and  1.5% 
in  2023  respectively, 
compared  to  a  fall  in  prices  of  0.2%  in  2021. 
The  spread  of  the  virus  has  also  affected 
activity  in  Korea,  with  GDP  now  set  to  expand 
by only 2.6% in 2022.  

levels  compared 

low 

19 

economies,  while 

The  growth  outlook  is  therefore  weaker 
for  most 
global 
intensifying. 
inflationary  pressures  are 
Global GDP is now expected to expand by 3.2% 
in  2022  and  3.5% 
in  2023.  Advanced 
economies  are  set  to  grow  by  2.8%  in  2022 
and 2.4% in 2023. EMEs are projected to grow 
by  3.6%  in  2022  and  4.5%  in  2023.  For  both 
advanced  and  emerging  economies,  this  is  a 
downgrade of more than 1 percentage point for 
2022 compared to the Autumn Forecast. In that 
forecast,  global  inflationary  pressures  were 
expected to ease gradually throughout 2022 as 
supply-side bottlenecks would unwind, demand 
in  advanced 
rotate  back  towards  services 
economies, and energy prices moderate. Global 
inflation  is  now  likely  to  move  higher  in  the 
near term, peak later, and be more persistent. 

The  outlook  for  the  US  economy  in  2022 
has  softened.  US  GDP  expanded  by  5.7%  in 
2021,  with  a  strong  fourth  quarter  seeing 
unemployment  falling  back  close  to  pre-
pandemic  levels  at  3.9%.  Output  contracted  in 
2022-Q1, with net exports being the main drag 
on growth, but domestic demand  continuing to 
expand  at  a  robust  rate.    Price  pressures  have 
broadened,  with  CPI  inflation  reaching  8.5% y-
o-y  in  March  2022.  The  US  Federal  Reserve 
raised  rates  by  0.25%  in  March,  and  has 
signaled  further  rate  rises  to  come.  While  the 
US  has  limited  direct  economic  exposure  to 
Russia  and  Ukraine, the  war  will  affect  the  US 
economy  via  the  commodity  price  channel. 

( a )201820192020202120222023202120222023Japan3.80.6-0.2-4.51.71.91.82.42.31.1United Kingdom2.31.71.7-9.37.43.41.66.94.81.7United States15.72.92.3-3.45.72.92.35.84.52.4Emerging and developing Asia33.46.35.2-1.26.95.25.37.25.85.3 - China18.66.76.02.28.14.65.07.95.35.3 - India7.07.34.5-6.68.37.46.59.07.86.0Latin America7.41.0-0.3-7.26.12.32.45.22.52.3 - Brazil2.41.81.2-3.94.60.71.54.92.12.3MENA5.61.11.6-3.23.45.43.83.13.52.9CIS4.53.22.7-2.84.7-11.71.94.23.02.6 - Russia3.12.82.0-3.04.7-10.41.53.92.62.2Sub-Saharan Africa3.32.52.5-2.14.33.63.73.13.33.4Candidate Countries2.23.11.11.310.22.13.18.64.14.0World100.03.52.8-3.35.83.23.55.74.53.5World, import4.20.9-8.410.44.94.49.16.44.7EU export market growth4.02.4-8.69.94.74.48.96.84.7Real GDP growthTrade  of goods and services, volumes(a)  Relative weights in %, based on GDP (at constant prices and PPS) in 2021.(b)  Imports of goods and services to the various markets (incl. EU-markets) weighted according to their share in country's exports of goods and services.Table I.2.1:International environment(Annual percentage change)Spring 2022Autumn 2021forecastforecast 
 
 
   
 
 
external  environment  due  to  slower  growth  in 
goods  trade.  Higher  food  prices  may  threaten 
food  security  and  stability  in  parts  of  the 
European  periphery  in  North  Africa  with  high 
dependence on imported supplies from Ukraine 
and  Russia  and  a  high  share  of  food  in 
consumption baskets (e.g. Egypt, Tunisia).  

Global  trade  growth  is  set  to  moderate 
significantly  in  2022.  The  strong  growth  in 
global trade  seen in 2021 was partly linked to 
the  synchronised  rebound  in  global  activity 
from the  slump  in  2020  (see  Graph  I.2.3), and 
to  the  unusually  high  demand  for  goods 
triggered by lockdowns in AEs. These underlying 
drivers  were  set  to  weaken  in  2022,  denting 
growth  in  goods  exports,  particularly  for  EMEs. 
Russia’s invasion of Ukraine, higher commodity 
prices, heightened stress in global logistics and 
renewed disruptions in supply chains are set to 
weigh on global trade activity (see Graph I.2.4). 
Furthermore,  a  strong  dollar  generally  affects 
negatively global trade, as it increases the cost 
of trade financing.  For the AEs and EMEs that 
largely  rely  on  tourism,  the  phasing  out  of 
travel  restrictions  will,  however,  provide  some 
boost to travel services. Overall, global imports 
of goods and services are now forecast to grow 
by 4.9% in 2022 and 4.4% in 2023. 

European Economic Forecast, Spring 2022 

The  Chinese  economy  significantly  slowed 
in  the  second  half  of  2021  and  2022-Q1 
and  now  faces  a  bleaker  outlook.  A  more 
challenging  external  environment,  a  slowing 
real estate sector and the COVID-19 pandemic 
will  weigh  on  growth  in  2022  and  2023.  The 
virus  suppression  measures  in  place  in  some 
major  cities  are  expected  to  negatively  impact 
private  consumption,  while  a  slower  pace  of 
construction  activity  will  weigh  on  investment 
growth.  Net  exports  are  expected  to  provide  a 
negative growth contribution in both 2022 and 
2023 as export growth is constrained by supply 
chain disruptions and rising producer prices. An 
expansionary  fiscal  impulse  (2-3%  of  GDP)  by 
the  general  government  should  mitigate  some 
of  these  impacts,  but  is  unlikely  to  help  to 
achieve  the  “around  5.5%”  real  GDP  growth 
target set by the authorities. Overall, growth  is 
expected to be around 4.6% in 2022 and 5.0% 
in  2023  –  a  sharp  decrease  from  the  average 
growth  rates  registered  over  the  previous 
decade.   

in  Russia  has 

the  weakening  outlook 

Russian  GDP 
is  expected  to  decline 
substantially,  by  around  10%  in  2022, 
though  projections  are  highly  uncertain. 
increased  sharply 
Inflation 
following  the  imposition  of  sanctions,  and  is 
expected  to  be  around  20%  in  2022,  strongly 
impacting  real  incomes  and  consumption.  The 
is  affected  by  high 
investment  climate 
uncertainty, 
for 
consumption,  and  a  tightening  of  financial 
conditions.  The corrosive effect of sanctions on 
production  chains  and  shortages  of  key 
imported  components  constitute  an  additional 
drag  on  investment.  The  overall  outlook  for 
Russia depends fundamentally on the prospects 
for its commodity exports. The current forecast 
assumes 
commodity  exports 
continue  to  flow  and  that  revenues  will  be 
strong, enabling the government to finance the 
war  and  support  the  economy  through  fiscal 
measures.  

that  most 

The  outlook  for  Candidate  countries, 
central Asia and most EME economies has 
also  worsened.  Regional  economies  will  be 
directly  affected  by  the  Russian 
invasion 
through  the  trade  channels  and  the  disruptive 
impact  of  sanctions.  While  EME  commodity 
exporters  will  benefit  from  higher  prices  (e.g. 
Saudi  Arabia,  Brazil,  Nigeria),  other  EMEs  will 
face  worsening  terms  of  trade  and  a  weaker 

20 

5060708090100110120130140150-20-15-10-5051015201314151617181920212223Graph I.2.3: World import volumesImports of goods (%)Imports of services (%)Imports of goods (rhs)Imports of services (rhs)% changeforecastIndex,2013=100 
      
 
Economic outlook for EA and EU 

end  of  the  yield  curve.  The  2-year  Treasury 
yield  has  risen  almost  200  bps  since  the  start 
of  2022,  bringing  it  close  to  the  10  year  rate 
(see  Graph  I.2.6).  The  rise  in  inflation  has 
outpaced  nominal  yield  increases  at  short 
maturities  (e.g.  up  to  two  years),  translating 
into further declines in real short term interest 
rates. For longer maturities, the rise in inflation 
expectations  goes  on  a  par  with  the  rise  in 
nominal  yields,  keeping 
rates  fairly 
constant  at  close  to  zero  in  the  US  and  still 
negative in the euro area. In EMEs, bond yields 
have  further  increased  with  abrupt  rises  in 
early 2022 amidst a more advanced monetary 
policy  tightening  cycle  in  most  EMEs  and 
decreasing capital inflows since autumn. 

real 

The  EU’s  direct  financial  exposures  to 
Russia  and  Ukraine  are 
limited.  The 
potential  losses  incurred  by  EU  investment 
funds  and  banks  are  not  sizeable  enough  to 
generate financial stability issues within the EU 
financial  system.  The  EU  banking  system  has 
built  resilience  over  the  past  years,  achieving 
strong  capital  and  liquidity  levels.  Hence  the 
direct  effects  of  the  war  in  Ukraine  are  set  to 
be contained. 

The  war  has  nevertheless 
triggered 
further  tightening  of  financial  conditions 
in  the  EU,  across  different  market 
segments.  Similarly  to  what  was  experienced 
elsewhere, EU  financial assets in both  risk and 
risk-free  market  segments  have  experienced 
losses amidst a  significant pick-up in volatility. 
Various 
conditions 
indicators  for  the  euro  area  confirm  the 
tightening  of  financial  conditions  in  the  euro 
area,  particularly  after  the  start  of  the  war  in 
Ukraine  (see  Graph  I.2.7).  The  tightening  has 
been  even  sharper  in  a  number  of  non-euro 

composite 

financial 

21 

2.2.  FINANCIAL CONDITIONS 

Recent  months  have  seen  global  financial 
conditions  tightening  and  volatility  rising, 
particularly  in  the  aftermath  of  Russia’s 
invasion of Ukraine. At the start of the year, 
concerns  about  soaring  inflation,  the  economic 
impact  of  the  Omicron  variant  and  fading 
monetary  policy  support  by  central  banks  set 
investors  on  a  cautious  footing.  Mid-February, 
geopolitics  took  centre  stage,  with  the  Russian 
military  aggression  against  Ukraine  sparking 
widespread  risk  aversion  (see  Graph  I.2.5). 
Losses  in  global  equity  markets  accelerated, 
reflecting 
funding  costs, 
worsening  economic  prospects  due  to  rising 
input  prices,  and 
energy  and  non-energy 
renewed supply disruptions.  

rising  corporate 

Yields on sovereign debt  across the globe 
have picked up rapidly. Indications by the US 
Federal  Reserve  Bank  of  a 
faster-than-
previously  anticipated  pace  of  interest  rate 
rises, in an effort to prevent high inflation from 
becoming  persistent,  sparked  yield  increases 
across  maturities,  most  notably  at  the  short 

-0.7-0.3-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02223pps., %Graph I.2.4: Changes in contribution to global non-EU import growth: Spring 2022 vs. Winter 2022 ForecastOther emerging and developing (Latin America, MENA and SSA)Russia, Eastern Neighbourhood and Central AsiaOther emerging and developing AsiaChinaAdvanced economies excl. EUWorld excluding EU (y-o-y %)9899100101102103104Jan-19Jun-19Nov-19Apr-20Sep-20Feb-21Jul-21Dec-21May-22Graph I.2.5: Global financial conditionsDeveloped MarketsEmerging MarketsWorldSource: Goldman Sachs Research.-1.0-0.50.00.51.01.52.02.53.03.505101520%remaining maturity in yearsGraph I.2.6: Yield curves in the US and the euro areaEA (28.04.2022)US (28.04.2022)EA (23.02.2022)US (23.02.2022)EA (24.10.2021)US (24.10.2021)Source: ECB, US Department of Treasury. 
   
     
     
European Economic Forecast, Spring 2022 

area  EU  Member  States  as  their  central  banks 
have  continued  to  raise  their  policy  rates  in 
response to strong inflationary pressures (i.e. in 
Czechia,  Hungary,  Poland,  and  Romania).  Rises 
in  rates  have  not  prevented  a  depreciation  of 
these  currencies  against  the  euro,  reflecting 
these  countries’  higher  economic  exposure  to 
Russia and the role of safe haven that the euro 
plays with respect to neighbouring countries.   

rate hikes this year, with a first one expected to 
take place already in July.(5)  

in 

In  nominal  effective  terms,  the  euro  has 
depreciated  by  2.1%  since  end  January. 
The  ECB  remains  behind  the  FED 
its 
tightening  cycle.  The  ensuing  yield  differential 
coupled  with  the  safe  heaven  role  of  the  US 
dollar  is  reflected  in  a  significant  depreciation 
of the euro against the US dollar since the end 
of  January  (-5.3%).  The  euro  also  depreciated 
against  the  Chinese  renminbi,  on  the  back  of 
higher  demand  for  Chinese  bonds  and  goods, 
the  Australian  dollar  and  the  currencies  of 
some  emerging  markets  (Brazil,  India,  Mexico). 
By  contrast,  the  euro  appreciated  against  the 
Japanese  yen  and  the  Turkish  lira.  Overall,  in 
nominal  effective  terms,  the  value  of  the  euro 
has  fallen  by  about  2%  since  the  end  of 
January. 

Sovereign  bond  yields 
increased,  with 
limited widening in euro area spreads. The 
10-year German Bund yield increased by more 
than  100  bps.  since  the  start  of  the  year, 
reaching 0.95% at the end of April, while the 2-
year  Bund  yield  increased  somewhat  less,  but 
turned  positive.  At  the  same  time,  market-
based  inflation  expectations  in  the  euro  area 
have  been  moving  up,  driving  the  short  term 
real  interest  rates  further  down.  Euro  area 
sovereign  bond  spreads  vis-à-vis  the  German 
in  a  measured 
benchmark  have  widened 
manner 
joint  bond 
issuance,  aimed  at  funding  the  EU’s  economic 
recovery  under  the  Recovery  and  Resilience 
Facility  and  other  EU-budget  programmes 
within  NextGenerationEU,  implies less  issuance 
at  national  level  and  has  likely  contributed  to 
limit the rise in spreads at a time when the ECB 
reduces,  and  eventually  ends, 
its  asset 
purchases. 

(see  Graph 

I.2.8).  EU 

(5)  At the end of April, the one month euro short term rate 
(1M  €STR)  forward  curve  was  consistent  with  an 
almost 20bps higher €STR rate by the end of July and 
almost 160bps higher rates in one year time.  

With  the  war  strengthening  inflationary 
pressures,  the  ECB  has  accelerated  the 
pace  of  policy  normalisation,  while 
retaining  flexibility.  The  ECB  conducted  a 
last  targeted  long  term  refinancing  operation 
(TLTRO III) in December 2021 and discontinued 
its  net  asset  purchases  under  the  pandemic 
emergency  purchase  programme  (PEPP)  at  the 
end  of  March  2022.  As  inflationary  pressures 
strengthened  further,  the  ECB  accelerated  the 
pace  of  policy  normalisation.  In  particular,  the 
ECB’s Governing Council revised downwards the 
expected volume of net asset purchases under 
the asset purchase programme (APP) for 2022 
with a view to ending net purchases in the third 
quarter  of  2022.(4)  At  the  same  time,  the  ECB 
emphasised that it would retain flexibility in its 
conduct  of  monetary  policy,  given  the  high 
uncertainty 
for 
inflation  and  growth.  Hence,  it  amended  its 
forward guidance on interest rates, stating that 
any  adjustment  to  its  policy  rates  would  take 
place  ‘sometime  after’  the  end  of  net  asset 
purchases, and that such an adjustment would 
be gradual. Markets now expect several interest 

the  outlook 

surrounding 

(4) 

In  March,  the  ECB  reduced  the  scheduled  monthly  net 
asset purchases under the APP for the second quarter 
from  EUR 40bn  per  month  to  EUR  40bn  in  April, 
EUR 30bn in May and EUR 20bn in June.   

22 

00.10.20.30.40.50.60.7-2-10123420182019202020212022Graph I.2.7: Financial conditions' indicatorsBloomberg FCIBanque de France FCIECB Indicator of Systemic Stress (rhs)Sources: Banque de France, Bloomberg, ECB 
     
                                                        
                                                        
Economic outlook for EA and EU 

Bank  lending  in  the  euro  area  was  still 
strong in the first quarter of this year. ECB 
data show that the annual growth rate of credit 
to  the  private  sector  stood  at  4.7%  in  March 
compared  with  4.2%  in  December  last  year.  (6) 
The  annual  growth  rate  of  adjusted  loans  to 
households  stood  at  4.5%  in  March,  compared 
with  4.2%  in  December,  while  the  annual 
growth  rate  of  adjusted  loans  to  non-financial 
corporations  declined  somewhat,  to  4.2%  in 
March from 4.3% in December. 

Credit  standards,  however,  tightened  in 
the  first  three  months  of  the  year.  In  the 
most  recent  ECB  Bank  Lending  Survey  of  April 
2022,  euro  area  banks  reported  a  slight  net 
tightening  of  credit  standards  for  loans  to 
households  for  house  purchase,  driven  by 
perceptions  of  increased  risk  and  decreased 
risk  tolerance.  For  the  second  quarter,  banks 
expect a considerably stronger net tightening of 
credit  standards  for  loans  to  firms,  likely 
reflecting the uncertain economic impact of the 
war  in  Ukraine  and  the  anticipation  of  less 
For 
accommodative  monetary 
households,  banks  expect  a  moderate  net 
tightening of credit standards for housing loans 
and  for  consumer  credit  and  other  lending  to 
households.  In  addition,  banks  reported  an 
increased demand for loans to households and 
firms.  The  latter  is  driven  by  a  strong  positive 
impact of financing needs of firms for working 
capital,  reflecting  supply  chain  disruptions  as 
well  as  precautionary  inventories  and  liquidity 
holdings. Fixed investment continued to have a 
positive  impact  on  loan  demand,  but  less  than 
in the previous quarter. 

policy. 

(6)  Loans,  adjusted  for  loan  sales,  securitisation  and 

notional cash pooling. 

23 

customary, 

long-term  nominal 
Both  short-  and 
interest rates are set to increase over the 
forecast  horizon.  As 
the 
assumptions  for  interest  rates  used  in  this 
forecast are market-based. Short-term nominal 
rates are expected to turn positive in the fourth 
quarter of this year and to stand above 1.5% at 
the end of 2023. In view of the projected path 
of  inflation,  real  short-term  interest  rates 
would  rebound  strongly  from  their  record  low 
levels,  while  remaining  in  negative  territory  by 
the end of 2023. For longer maturities, nominal 
and real rates in the euro area are expected to 
increase  gradually  over  the  forecast  horizon, 
with  real  rates  also  projected  to  remain 
negative  by  the  end  of  2023.  High  inflation 
normally erodes the value of real debt and the 
real  cost  of  servicing  it,  as  incomes  tend  to 
evolve 
is  not 
necessarily the case when, following a terms of 
trade  shock,  firms  are  not  able  to  pass-on  all 
the increase in costs and inflation outpaces the 
increase  in  nominal  wages.  On  the  contrary, 
some  borrowers  with  flexible  rates  or  short-
term  re-financing  needs  might  be  exposed  to 
an 
rates,  and  a 
interest 
simultaneous  reduction  in  their  debt-servicing 
capacity.       

inflation.  This 

line  with 

increase 

in 

in 

Increased  risk  aversion  led  to  widening 
corporate  bond  spreads  and  weighed  on 
equity  prices.  Corporate  bond  spreads  in  the 
investment  grade  and  particularly  in  the  high-
yield  segment  have  widened  over  the  past 
months,  leading  to  an  increase  in  the  cost  of 
market-based  funding  in  the  EU  (see  Graph 
I.2.9).  Meanwhile  bank  lending  rates  for  both 
corporations  and  households  have  increased 
more moderately.  

-1.5-1-0.500.510100200300Jan-20Jul-20Jan-21Jul-21Jan-22Graph I.2.8: Spreads to the German bund yield, 10-year maturityESFRITDE - bund yield (rhs)basis points%Source:  Bloomberg.20040060080010001200050100150200250Jan-20Jul-20Jan-21Jul-21Jan-22Graph I.2.9: Euro area corporate bond spreads, 5-year maturityAAABBBHigh yield (rhs)basis pointsSource: Bloomberg.basis points 
    
       
                                                        
European Economic Forecast, Spring 2022 

Equity  valuations  have  declined  amidst 
in  equity 
heightened  volatility.  Losses 
rapid 
the 
following 
markets  accelerated 
escalation  of  the  Ukrainian  crisis  and  the 
uncertainties  about  rising  commodity  prices 
(see  Graph  I.2.10).  European  bank  stocks,  in 
particular  those  with  high  exposures  to  Russia 
sold  off  sharply  following  Russia’s  invasion  of 
Ukraine, reflecting the risk of a severe shock at 
bank  or  investment  fund  level  in  case  of  a 
default of the Russian sovereign debt and large 
corporates,  possibly  simultaneously.  Regarding 
non-financial corporations, the lower valuations 
on  equity  markets  are  rather  motivated  by 
higher  long-term  interest  rates  and  increased 
risk  perception  than  by  their  intrinsic  situation. 
EU non-financial corporations are on aggregate 
in  a  strong  position  with  overall  healthy 
balance  sheets,  strong  earnings  and  a  longer 
maturity profile on their debt. However, there is 
significant  divergence  across  economic  sectors 
and types of firms. SMEs are significantly more 
vulnerable than large corporates.  

The  war  in  Ukraine  has  reinforced  pre-
existing  vulnerabilities in  the EU financial 
system.  Real  estate  prices  are  above  their 
long-term  fundamentals,  after  a  decade  of 
strong  growth  and  the  exuberant  increases  of 
last  year.  Households  (and  the  construction 
sector)  are  vulnerable  to  corrections  in  house 
prices. Valuations in financial markets may not 
have  fully  priced  in  the  risk  of  unfolding  of 
adverse  events  and  are  therefore  at  risk  of 
the 
further  corrections. 
corporate  sector,  squeezing  profit  margins  on 
the  back  of  higher  costs 
the 
vulnerabilities  stemming  from  the  large  debt 
the  pandemic. 
liabilities 
Vulnerabilities  stemming  from  high  sovereign 
debt  are  mitigated  by  the  large  share  of  debt 

In  segments  of 

incurred  during 

increase 

24 

locked  in  at  record-low  rates.  The  banking 
sector remains well capitalised.  

2.3. 

THE GROWTH OUTLOOK 

Recent pandemic developments 

Despite  a  high  caseload,  the 
lower 
severity  of  the  Omicron  variant  allowed 
easing  restrictions  in  the  EU.  During  the 
first  quarter  of  the  year,  the  7-day  incidence(7) 
of cases reached a record level of 2,820 on 30 
January  and  declined  significantly  afterwards 
to a level of around 600 at the end of April. By 
then,  pandemic  developments  were  improving 
in  many  respects  (see  Graph  I.2.11).  With  the 
effective  reproduction  rate  (R)  firmly  below  1 
since early April, the spread of infections should 
continue to fall in the coming weeks. The latest 
surge in infections in the EU had limited impact 
on  the  number  of  hospitalisations,  and  a 
significantly  lower  effect  on  death  rates  than 
previous  waves.  Thus,  reassured  by  the  lower 
severity of Omicron in terms of ICU admissions 
and  deaths  as  well  as  the  retrenching  number 
of  cases,  Member  States  relaxed  restrictions 
starting  in  mid-January.  In  consequence,  the 
average  stringency  of  containment  measures, 
as  measured  by  the  Oxford  Stringency  Index, 
retreated  to  its  lowest  since  the  start  of  the 
pandemic in February, and continued to decline 
thereafter(see Graph I.2.12). 

(7)  The  7-day  average  of  number  of  new  infections  per 
million  people.  Due  to  limited  testing,  the  number  of 
confirmed  cases  is  lower  than  the  true  number  of 
infections. 

5075100125150Jan-20Jul-20Jan-21Jul-21Jan-22Graph I.2.10: Stock market performanceEurostoxx 600US S&P 500Hang Seng CompositeEurostoxx 600 BanksIndex,Jan 2020=100Source: Bloomberg.0102030405060708090100CasesPositivityrateTestingrateDeathrateHospitaloccupancyICUoccupancy% of reporting MSGraph I.2.11: Current pandemic trends, EUIncreasingStableDecreasingSource: ECDC, Week 16 of2022 
       
      
                                                        
Still, high worker absenteeism weighed on 
the  recovery  of  mobility.  Available  high 
frequency data shows that people’s mobility in 
the  EU  increased  in  the  course  of  the  first 
quarter  at  a  time  when  most  restrictions  were 
lifted, but remained below its average in 2021-
Q4. This might be related to the fact that case 
numbers,  as  well  as  staff  absenteeism  due  to 
sickness  and  mandatory  isolation  at  that  time, 
remained  high.  While  at  the  end  of  April  there 
were no official data available for the EU as a 
whole, data from Belgium(8) and the UK(9) point 
to a significant number of people on sick leave 
or isolating in the first quarter of 2022.  

become 

The  future  evolution  of  the  pandemic 
remains  highly  uncertain.  While  in  the  near 
future absenteeism could continue to weigh on 
overall  activity,  in  the  long  run,  as  more 
treatments 
stringent 
containment  measures  and  other  non-
pharmaceutical  interventions  are  expected  to 
play  a  marginal  role  and  no  longer  pose  a 
threat 
activity.  However, 
uncertainty  over  the  future  evolution  of  the 
pandemic,  including  possible  new  shocks  to 
labour supply, remains significant. 

available, 

economic 

to 

Activity around the turn of 2021 

As  the  EU  economy  moved  from  recovery 
to  expansion  in  the  last  quarter  of  2021, 
momentum  eased and was further dented 

(8)  https://www.acerta.be/fr/a-propos-dacerta/dans-la-
presse/premier-trimestre-2022-labsenteisme-pour-
cause-de-maladie-ne-cesse-daugmenter 

(9)    https://www.ons.gov.uk/economy/economicoutputandpro
ductivity/output/bulletins/economicactivityandsocialcha
ngeintheukrealtimeindicators/latest 

Economic outlook for EA and EU 

by 
intensifying  headwinds.  Amidst  a 
renewed COVID 19 wave, continued disruptions 
in  global  production  and  distribution  networks, 
as well as price pressures, EU real GDP growth 
decelerated to 0.5% in 2021-Q4. Still, real GDP 
increased in most  countries except Ireland and 
Austria (-5.4% and -1.5%, respectively) as well 
as  to  a  lesser  extent  in  Germany,  Latvia, 
Croatia  and  Romania.  This  follows  a  robust 
rebound  in  the  previous  two  quarters  (of 
slightly more than 2% in each) that had led to 
the  recovery  of  pre-pandemic  output  levels  in 
the EU in 2021-Q3.  

since  2019. 
to 

Growth  moderation  owed  as  much  to 
higher  prices  as  to  the  resurgence  of  the 
pandemic.  As  nominal  gross  disposable 
income  fell  for  the  first  time  in  2021  and 
inflation  eroded  real  incomes  to  a  significant 
extent, the household saving rate fell to 13.3%, 
Private 
level 
its 
lowest 
consumption 
falling 
fell  0.3%,  due 
consumption  on  durable  goods  and  services 
(see Graph I.2.13). This is also reflected in value 
added  growth  in  the  services  sector,  which 
flat  despite  a  minor 
remained  broadly 
in  contact-intensive  activities(10) 
contraction 
(see  Graph  I.2.14).  Loss  in  momentum  was 
significant,  leaving  output  of  those  sectors 
most exposed to restrictions 3.5% short of their 
late 2019 levels, two years into the pandemic. 
Exports  (1.5  pps.),  investment(11)  and  public 
consumption all provided  positive contributions 
to  growth,  as  did 
the  accumulation  of 
inventories  (all  by  0.2  pps.  each).  Exports  of 
goods grew at their fastest quarterly rate in the 
year,  in  line  with  the  6th  consecutive  increase 
in 
industrial  output.  Exports  of  services 
continued  to  increase  strongly  (4.6%  after 
8.2%),  managing  to  go  above  their  pre-
pandemic level.  

(10)  Contact-intensive  sectors  include:  arts,  entertainment 
and  recreation  as  well  as  wholesale  and  retail  trade, 
transport,  accommodation  and  food  service  activities. 
There  are  sectors  with  non-teleworkable  occupations, 
reliant  on 
face-to-face  customer 
interaction,  which  have  been  particularly  affected  by 
containment measures. 

teamwork  or 

(11)  To  look  through  the  short-term  volatility  induced  by 
activities  of  multinational  firms  in  Ireland,  data  from 
the country is excluded in the analysis of investment. 

25 

-60-50-40-30-20-100-90-80-70-60-50-40-30-20-100Feb-20Aug-20Feb-21Aug-21Feb-22Graph I.2.12: Mobility and stringency of restrictions, EU compositeStringency (inverted)Mobility (rhs)Note: 7-day moving average.Source: Google, University of Oxford. 
      
                                                        
                                                        
European Economic Forecast, Spring 2022 

Nevertheless,  the  rebound  over  the  year 
was robust and led to a strong carry-over 
into  2022.  Despite  the  loss  of  momentum, 
output  grew  by  5.3%  in  the  year  as  a  whole 
and provided 2022 with a strong carry-over of 
around 2% (see Box I.2.1). 

Developments in 2022-Q1 

Before Russia’s war of aggression against 
Ukraine, data confirmed expectations of a 
temporary slowdown  in growth. In January, 
the  Economic  Sentiment  Indicator  (ESI)  for  the 
EU  eased  on  the  back  of  declines  in  services, 
construction  and  industry  confidence  as  the 
pandemic situation and supply bottlenecks took 
a  toll  on  activity  in  these  sectors.  Consumer 
confidence also moved down somewhat due to 
diminished  appraisals  of  households’  future 
financial  situation,  likely  reflecting  lingering 
uncertainty  about 
the 
pandemic, as well as the impact of inflationary 
pressures.  By  contrast,  confidence  in  retail 
remained  strong. 
reduced 
confidence  is  reflected  in  January’s  industrial 

the  evolution  of 

  This  overall 

26 

in 

production  in  the  EU  as  well  as  in  new  car 
registrations  in  the  euro  area,  which  both 
dropped. Retail sales in the EU failed to recover 
from  the  strong  decline  in  December.  As  the 
wave  of  infections  abated,  February  saw  an 
improvement  of  economic  sentiment, 
in 
particular in the services sector. This pick-up in 
economic activity was confirmed by a rebound 
of  industrial  production  amid  signs  of  easing 
supply  chain disruptions, as  well as in new car 
the  euro  area.  However, 
registrations 
consumer  confidence  recorded  another  decline 
to  below  its  long-term  average  as  households’ 
reported  more  pessimistic  views  on  their  past 
and  future  financial  situation,  as  well  as  their 
reduced  intentions  to  make  major  purchases, 
possibly linked to increased fears that the high 
inflation  will  cut 
their  purchasing  power. 
Consistently,  growth  of  retail  sales  remained 
subdued in February. The Purchasing Managers 
Indices (PMI) provided a similar picture, with the 
euro  area  composite  PMI  declining  in  January 
and picking up somewhat in February. 

to 

and 

prices 

already 

food 
adding 

The  war  marked  a  major  turnaround  to 
short-term  growth  prospects.  As  an 
immediate  consequence,  energy, industrial  raw 
increased 
material 
substantially, 
high 
inflationary  pressures  and  creating  further 
headwinds  to  households’  purchasing  power 
and  private  consumption.  Furthermore,  trade 
turbulences  resulted  in  new  indications  of 
increased  bottlenecks.    While  at  the  cut-off 
date  of  this  forecast  there  was  no  hard  data 
for  March,  surveys  and  other  ‘soft’  sources  of 
information provided evidence of the significant 
hit to growth.  

  The 

new 

Commission’s 

Economic 
Uncertainty Indicator rose abruptly in March 
(+10.7  points  to  25.8),  driven  by  growing 
uncertainty about the outlook in all business 
sectors  and  among  consumers.  In  a  similar 
vein,  measures  of  geopolitical  risk  hit  their 
highest in several decades.(12)  

  The  ESI  dropped  substantially  in  the  EU  (-
7.0  points  to  106.6).  Noteworthy  was  the 

(12)  GDP-weighted average the geopolitical risk (GPR) index 
for  10  Member  States  representing  80%  of  EU  GDP. 
See  Caldara,  Dario  and  Matteo  Lacoviello  (2022), 
“Measuring  Geopolitical  Risk,”  American  Economic 
Review, April, 112(4), pp.1194-1225. 

758085909510010511019-Q420-Q421-Q419-Q420-Q421-Q419-Q420-Q421-Q4Graph I.2.13: GDP demand-side components, EUTotalGoodsServicesMachinery & equipment & othersConstructionPrivate consumptionInvestment*ExportsIndex, 2019-Q4 =100Note: *excluding Ireland.758085909510010519-Q420-Q421-Q419-Q420-Q421-Q419-Q420-Q421-Q419-Q420-Q421-Q2Industry(19.7%)Construction(5.5%)Contact-intensive*(22.5%)Other services(50.5%)Index, 2019-Q4=100Graph I.2.14: Gross value added in main sectors, EUNote: *Wholesale and retail, transport, accommodation, food services; arts, entertrainment, recreation. % of GVAin 2019in brackets. 
     
     
                                                        
the  collapse 

slump in consumer confidence, of 9.1 pts  – 
the  second-largest  monthly  fall 
in  the 
history of the survey – to the weakest since 
the  onset  of  the  pandemic  and  below  the 
lows  of  2009  and  2012.  This  mostly 
reflected 
in  households’ 
expectations  about  the  general  economic 
situation,  but  also  about  their  own  future 
financial  situation.  The  divergence  between 
consumers’  assessments  of  their  current 
situation  versus  expectations  about  the 
future reveals the extent of the “war shock”, 
driving  a  wedge  between 
two 
assessments  (see  Graph  I.2.15).  Industry 
confidence also fell to a 12-month low due 
in  production 
to 
expectations  since 
the 
pandemic. Selling price expectations rose to 
unprecedented  levels  in  all  sectors,  in  line 
with increased commodity prices.  

sharpest  drop 

the  start  of 

the 

the 

  PMIs  in  March  flagged  slowing  economic 
activity  and  worsening  supply  pressures, 
interrupting  the  normalisation  of  supply 
constraints  that  was  starting  to  take  place. 
Business  confidence  took  a  significant  hit, 
with future output expectations slumping to 
a  17-month  low.  The  euro  area  composite 
PMI fell 0.6 pts in March to 54.9, leaving the 
average in Q1 marginally below that in Q4. 
Firms  also  reported  record  increases  in  
input  costs  and  output  prices,  as  well  as  a 
four-month high in supplier delivery times – 
signalling 
the 
renewed  disruptions 
workings of supply chains. Moreover, export 
demand  fell  for  the  first  time  since  late 
2020.  

in 

Economic outlook for EA and EU 

continued  growth  was  reported  in  most 
Member  States.  Amidst 
the  COVID-19 
Omicron  wave,  the  rise  in  energy  costs  and 
inflation  in  general,  as  well  as  the  onset  of 
Russia’s  war,  EU  real  GDP  growth  decelerated 
to  0.4%  quarter-on-quarter  (0.2%  in  the  euro 
area), according to Eurostat’s preliminary flash 
estimate.  As  compared  to  the  first  quarter  of 
2021, GDP was 5.2% higher in the EU (5.0% in 
the euro area). Continued economic growth was 
reported from 9 of the 11 Member States with 
a preliminary flash estimate. Among the largest 
euro  area  countries,  output  increased  in  Spain 
by 0.3% and by 0.2% in Germany, while activity 
remained unchanged in France and fell in Italy 
(0.2%).  While  no  expenditure  breakdown  was 
published,  data  from  Member  States  suggest 
that  household  consumption  was  a  significant 
drag  on  growth  while  business  investment 
appears to have remained firm.  

The growth outlook 

in 

Real  GDP  growth  in  the  EU  is  expected  to 
remain  subdued  in  the  second  quarter  of 
2022.  High  energy  prices,  persistent  supply-
side disruptions and the unfolding effects from 
Russia’s  invasion  of  Ukraine  are  expected  to 
dampen  growth  dynamics 
the  second 
quarter.  However, 
the  mitigating  positive 
effects  from  the  reopening  of  parts  of  the 
services  sector  should  keep  the  economic 
rebound  on.  In  April,  the  S&P  Global  Flash 
Eurozone  PMI  marked  a  seven-month  high  (at 
55.8),  driven  by  the  services  activity  index, 
which  increased  to  an  eight-month  high  (of 
57.7). By contrast, in line with the Commission’s 
industry  confidence  indicator,  the  euro  area 
manufacturing  output  PMI  fell  to  a  22-month 
low  in  April  (though  remaining  slightly  above 
the  expansionary  threshold,  at  50.4).  The  
subcomponents  on  new  orders  accelerated, 
which  usually  signals 
improving  demand 
conditions  but  could  also  hint  at  the  difficulty 
of meeting previous demand. 

In  the  first  quarter  of  2022,  economic 
activity  in  the  EU  slowed  down,  but 

27 

-5-4-3-2-101234Jan-20Jan-21Jan-22Jan-20Jan-21Jan-22Jan-20Jan-21Jan-22Jan-20Jan-21Jan-22Jan-20Jan-21Jan-22FinancialsituationGeneraleconomicsituationMajorpurchasesSavingsPrice trendsGraph I.2.15: European Commission Consumer Surveys, gap between future and current expectationspps. ch. since Dec-19More positive about thefuture 
       
 
 
 
European Economic Forecast, Spring 2022 

28 

Box I.2.1: Carry-over effects and the annual growth forecast for 2022Annual growth rates depend not only on growth in the current year, but also on growth dynamics in the previous year. The carry-over effect shows how much GDP (or any of its components) would grow in the current year, on a year-on-year basis, if it remains at the same level as in the last quarter of the previous year. This concept can generally be applied to data with a frequency of less than one year, such as monthly and quarterly data. The difference between the annual growth rate in the current year and the carry-over effect from the previous year informs about growth dynamics within the current year. If quarterly data are calendar-adjusted but annual data are not, calendar effects need to be taken into account.    Carry-over effects can be particularly strong in times of sharp upturns and downturns. In the past two decades, economic activity fell most during the Global Financial Crisis (GFC) and when the pandemic started (see Graph 1), but the different timing and dynamics of the declines and the subsequent recoveries resulted in a different balance between carry-over effects and within-year growth. During the GFC, GDP in the EU started falling in the second quarter of 2008, resulting in a negative carry-over to 2009 that added to negative growth in that year. However, the recovery as of the third quarter of 2009 was sufficiently strong to result in a small carry-over effect to 2010. In 2020, due to the fast rebound after the two-quarter recession caused by the pandemic, the carry-over to 2021 was positive (2.4%). In the six years before the pandemic (2014-2019), the average GDP growth rate of 2.1% in the EU included on average carry-over effects of 0.8%.  The growth forecast for 2022 looks strong, but includes only subdued growth dynamics within the year. In 2021, the re-opening phase fuelled GDP growth in the EU in particular in the second and third quarter, resulting in a strong carry-over to 2022 of 1.9%. This accounts for most of the projected annual growth in 2022, reflecting an outlook of subdued growth within 2022 (see Graph 2).     Carry-over effects are also important for GDP demand components. In the second half of 2020, the pandemic-related shift in spending from services to goods pushed goods imports and exports, resulting in high carry-overs to 2021 for the two components (see Graph 3). In 2021, the rebalancing between spending on goods and services brought high carry-overs for services trade. In addition, private consumption rebounded strongly, which explains the relatively high carry-over to 2022.      -8-6-4-20246990103050709111315171921%Graph 1: Composition of annual GDP growth rates,  EU, 1999-2021Carry-over effectWithin-year growthAnnual growth (cal. adj.)969810010210420-Q421-Q121-Q221-Q321-Q422-Q122-Q222-Q322-Q4Graph 2: Quarterly GDP levels and their implications for annual growth in 2022, EUQuarterly GDPAverage quarterly GDPWithin-yeargrowth in2022 (0.8%)Carry-over to 2022(1.9%)Annual GDP growth(2.7%)Index, 2021=100-20246810From 2020 to 2021From 2021 to 2022Graph 3: Carry-over effects of GDP components from 2020 and 2021, EUPrivate conumptionPublic consumptionInvestmentExports (goods)Exports (services)Imports (goods)Imports (services)GDP 
 
 
 
 
        
 
 
Economic outlook for EA and EU 

is  revised  down 
The  growth  outlook 
markedly  for  2022  and  slightly  for  2023. 
All in all, GDP growth is expected to slow down 
from 5.4% in 2021 to 2.7% in 2022 in both the 
EU  and  the  euro  area.  As  the  economy  moved 
from  recovery  to  expansion,  a  slowdown  in 
growth  was  largely  expected.  In  the  Winter 
interim  Forecast  (February  2022),  however, 
growth was still expected at 4.0% for 2022 (EU 
and  euro  area).  The  weaker  outlook  for  2022 
includes an almost unchanged carry-over effect 
from  2021  (1.9%  in  both  the  EU  and  the  euro 
area) but substantially lower growth within the 
year  (see  Box  I.2.1  on  carry-over  effects). 
Annual GDP growth should moderate further in 
2023,  to  2.3%  in  the  EU  and  the  euro  area, 
which  is  markedly  lower  than  expected  in  the 
winter (2.8% in the EU, 2.7% in the euro area). 
The  growth  spillover  from  2022 
the 
subsequent year is much smaller than it was in 
the  last  two  years.  This  means  that  growth 
generated  within  the  year  plays  a  larger  role 
for the annual growth rate than before. 

to 

The EU economy converges to its potential 
level  of  activity  by  2023,  one  year  later 
than  expected  before.  The  output  gap  – 
which  signals  the  cyclical  position  of  an 
economy – is estimated to be closed next year, 
following three  consecutive years during which 
the  economy  operated  below  its  potential.  In 
the  Commission’s  Autumn  Forecast,  the  gap 
was expected to be broadly closed already this 

year.  In  the  wake  of  the  war  in  Ukraine,  the 
closure  of  the  gap  with  potential  is  therefore 
delayed  by  one  year.  One  should  nevertheless 
acknowledge  the  uncertainty  regarding  such 
estimates  in  a  period  of  significant  structural 
changes and large macroeconomic shocks. 

Moreover,  the  revised  growth  projections 
imply  slower  convergence  to  the  growth 
path  expected  before  the  pandemic.  While 
in the Winter 2022 interim Forecast the volume 
of  EU  economic  output  in  the  last  quarter  of 
2023 was expected to exceed its pre-pandemic 
level by  6.2%, now that  gap is projected to be 
only  4.8%.  The  outlook  for  lower  growth  in 
2022  and  2023  also  widens  the  gap  with  the 
output  level  that  the  economy  would  have 
attained in the absence of the pandemic shock 
–  based  on  an  extrapolation  of  the  growth 
outlook  from  the  last  forecast  preceding  the 
pandemic,  the  Winter  2020  interim  Forecast 
(see Graph I.2.16).  

Domestic  demand  remains  the  key  driver 
of  growth.  In  both  2022  and  2023,  real  GDP 
is  still  expected  to  be  driven  by 
growth 
domestic  demand. 
In  particular,  private 
consumption  and 
investment  will  continue 
growing, albeit at a lower pace than previously 
expected,  under  the  push  of  countervailing 
forces.  On  the  one  hand,  inflation,  uncertainty 
and aggravated supply bottlenecks will play as 
constraining  factors.  On  the  other  hand,  the 

29 

20162017201820192020202120222023bn EuroCurr. prices% GDP7,429.351.02.22.11.81.6-7.33.83.32.73,217.522.12.01.11.22.01.13.80.80.43,209.522.03.34.13.46.5-6.24.23.13.6156.31.10.50.81.00.80.11.11.00.97,399.050.83.55.83.83.0-8.410.75.04.621,410.1146.92.83.72.72.7-6.66.53.53.16,836.046.94.65.64.24.6-8.29.35.04.714,574.1100.02.02.82.11.8-5.95.42.72.314,478.999.32.22.92.31.8-6.15.32.72.212,253.984.11.92.61.81.6-6.45.42.72.31.21.21.00.8-3.82.01.71.40.40.20.20.40.20.80.20.10.70.80.71.4-1.40.90.70.80.00.30.1-0.2-0.50.50.0-0.11.72.71.81.5-4.25.02.62.54.05.23.93.9-9.79.35.14.7-1.9-2.3-1.8-2.13.8-4.0-2.4-2.4-0.30.30.0-0.6-0.41.00.20.1GNIExports of goods and servicesTable I.2.2:Composition of growth - EU(Real annual percentage change)Spring 2022forecast2021Real percentage changePrivate consumptionPublic consumptionGross fixed capital formationChange in stocks as % of GDPFinal demandImports of goods and servicesGDPp.m. GDP euro areaFinal demandImports (minus)Net exportsContribution to change in GDPPrivate consumptionPublic consumptionInvestmentInventoriesExports 
 
 
   
 
 
European Economic Forecast, Spring 2022 

a 

After 

post-pandemic  reopening  momentum,  fiscal 
measures  to  offset  rising  energy  prices,  a 
further  decrease  in  the  saving  rate  and  the 
deployment  of  the  RRF  will  act  as  favourable 
factors. 
significant 
providing 
contribution to growth over the past two years, 
not  least  through  increased  health  spending 
needs, public consumption is projected to grow 
more  modestly,  and  even  decline,  on  a 
quarterly  basis  in  most  quarters  of  2022. 
Finally,  net  exports  are  projected  to  provide 
only a marginal positive contribution to growth, 
with  both  export  and  import  volumes  slowing 
down.   

anticipated. 

to  weigh  on  companies’ 

Heightened  uncertainty  and  tightening 
financial  conditions  weigh  on  equipment 
investment.  Heightened  uncertainty  around 
the  unfolding  of  the  geopolitical  situation  and 
its  ramifications  for  the  demand  outlook  are 
set 
investment 
decisions and to delay the realisation of several 
investment 
inflationary 
plans.  Moreover, 
pressures  have  not  only  increased  costs  for 
companies but are also leading to a faster and 
stronger tightening of financing conditions than 
previously 
Finally,  material 
shortages will continue to constrain investment. 
The  latest  bi-annual  Commission  investment 
survey  (see  Graph  I.2.17),  conducted  between 
March  and  April,  confirms  a  downward 
adjustment of managers’ investment intentions 
in  manufacturing  as  compared  to  the  previous 
survey  of  October/November  2021.  On  the 
positive  side,  spillover  effects  from  increased 
public investment and the possible frontloading 
of energy saving in the context of REPower EU 
investment. 
are  set  to  support  equipment 
Overall,  however,  the  outlook  for  equipment 
investment  in  the  EU  is  subdued,  with  growth 
rates  projected  to  fall  from  9.7%  in  2021  to 

30 

2.7% in 2022, and to increase in 2023 to 4.3% 
(see Graph I.2.18). 

growth 

Construction 
is 
investment 
expected  to  moderate.  The  availability  of 
low-cost  mortgages  and  the  accumulation  of 
savings  during  the  pandemic,  in  particular  by 
higher-income  households,  continue  to  support 
residential  investment  in  the  near  term.  Going 
forward, the projected  fall in real incomes and 
rise  in  interest  rates  (and  thereby  borrowing 
costs)  are  expected 
to  stretch  housing 
affordability  and  dampen  private  residential 
demand. At the same time, in several countries 
material  scarcity  and  labour  shortages  are 
weighing  on  supply.  Residential  investment 
growth in the EU is thus projected to slow down 
from 6.8% in 2021 to 2.5% in each of the two 
forecast years. Overall, construction investment 
is expected to slow from 5.8% in 2021 to 2.5% 
in 2022 and 3.0% in 2023.  

Public investment is set to further expand, 
benefitting  from  continued  deployment  of 
the  RRF.  The  positive  effects  of  the  Recovery 
and Resilience Plans are set to be a key driver 
of  public  investment,  even  if  the  realisation  of 
several  planned  investments  may  be  affected 
by  supply  bottlenecks  (e.g.  material  scarcity) 
and cost increases. Public investment in the EU 
is  projected  to  increase  stronger  than  GDP, 
raising the public investment-to-GDP ratio for a 
fifth  consecutive  year,  from  3.2%  last  year  to 
3.4% in 2022 and 3.5% in 2023.  

859095100105110115181920212223-15-10-5051015Graph I.2.16: Real GDP growth path, EUGDP growth (q-o-q, rhs)GDP annual (level)GDP quarterly (level)GDP volumes, WiF'20%Index(2019-Q4 =100 for quarterly data, 2019=100 for annual data)forecastNote: WIF'20GDP volumes extended with average growth rate from 2010-2019.20212223242520212022Percentage balanceGraph I.2.17: March/April 2022 investment survey results, EUIndustryServices 
      
       
Economic outlook for EA and EU 

a surge in consumers’ price expectations for the 
next  twelve  months  to  an  all-time  high.  While 
consumers’  expectations  edged  up  slightly  in 
the April survey, their assessments of the past 
financial  situation  worsened  markedly  (see 
Graph  I.2.19).  These  readings  point  to  the 
negative 
inflation  and 
heightened uncertainty on consumption. 

impact  of  elevated 

The  gradual  normalisation  of  saving 
behaviour  is  set  to  provide  a  buffer 
against the decrease in purchasing power. 
Households’  purchasing  power 
is  being 
curtailed  by  rising  prices.  Gross  disposable 
income is projected to expand by 3.5% in 2022 
and 4.1% in 2023 in nominal terms on average 
in the EU (see Graph  I.2.20). Yet, with inflation 
running at high rates, the net result is a fall in 

31 

Overall,  the  outlook  is  for  investment  in 
the  EU  to  grow  by  3.1%  in  2022  and  by 
3.6% in 2023. Investment growth is held back 
by rising costs and heightened uncertainty. The 
limited ability of firms to  pass on  higher costs 
to  consumers  is  set  to  squeeze  their  profit 
margins. Heightened uncertainty and its impact 
on  the  demand  outlook  are  set  to  weigh  on 
companies’ investment decisions and delay the 
realisation  of 
investment  plans.  Moreover, 
in  financing  costs  and  material 
increases 
shortages continue constraining investment. 

in 

the 

slump 

consumer 
consumption 
the  Commission’s 

confidence 
The 
outlook. 
dampens 
According 
surveys, 
consumer  confidence  collapsed  in  March  and 
dropped further in April. The fall coincided with 

to 

-2-1012-8-6-4-20246819202122231920212223pps. %, pps.Graph I.2.18: Investment breakdown and investment rates since 2019, EU  excluding IEOther assetsEquipmentConstructionPublic inv.Private inv.Investment totalInvestmentgrowth by assetChange in investment rates(rhs)-40-30-20-1001020304050-70-60-50-40-30-20-100101819202122Past 12 monthsNext 12 monthsNext minus past (rhs)Graph I.2.19: Consumers' assessment of the past and future general economic situation,  EUbalancepts.Difference(next -past)20162017201820192020202120222023bn EuroCurr. prices% GDP6,249.551.02.01.81.51.3-7.93.53.22.62,711.822.11.91.11.11.91.13.90.80.52,693.922.04.03.93.16.8-7.04.23.13.5105.10.90.40.70.90.70.10.90.80.76,069.549.53.05.63.62.7-9.111.05.14.717,829.7145.52.63.42.42.5-7.16.33.53.15,575.545.54.35.23.84.7-9.08.85.14.812,253.9100.01.92.61.81.6-6.45.42.72.312,291.9100.32.12.72.11.4-6.75.42.82.214,574.1118.92.02.82.11.8-5.95.42.72.31.11.00.80.7-4.21.81.71.40.40.20.20.40.20.90.20.10.80.80.61.4-1.60.90.70.80.00.30.1-0.2-0.40.40.0-0.11.42.61.71.3-4.45.02.52.53.74.83.43.6-10.39.05.04.7-1.8-2.1-1.6-2.14.0-3.7-2.3-2.4-0.40.40.1-0.8-0.31.30.20.12021Table I.2.3:Composition of growth - euro area(Real annual percentage change)Spring 2022forecastContribution to change in GDPReal percentage changePrivate consumptionPublic consumptionGross fixed capital formationChange in stocks as % of GDPExports of goods and servicesFinal demandImports of goods and servicesGDPGNIp.m. GDP EUPrivate consumptionPublic consumptionInvestmentInventoriesExportsFinal demandImports (minus)Net exports 
      
      
 
 
   
 
 
European Economic Forecast, Spring 2022 

real disposable incomes in 2022, only partially 
recouped  in  2023.  Growth  in  consumption  is 
expected to resume as of the second quarter of 
2022,  as  the  labour  market  further  improves 
and  household  continue  to  consume  a  larger 
share  of  their  income.  The  household  savings 
rate  is  projected  to  fall  in  the  EU  from  17.0% 
last year to 13.8% in 2022 and 12.5% in 2023, 
which  is  the  saving  rate  recorded  before  the 
pandemic in 2019. In addition, the phasing out 
related 
of  many 
containment  measures,  should  allow  for  a  full 
resumption  of 
contact-
intensive services.  

consumption  of 

remaining 

pandemic 

characterised the export and the import side of 
foreign  trade.  In  2021,  net  exports  contributed 
1.0  pps  to  GDP  growth,  as  the  strong  export 
growth  largely  exceeded  import  growth.  Export 
growth  was  already  expected  to  be 
less 
buoyant this year in the previous forecast. With 
downward  revisions  for  imports  and  exports 
being  broadly  similar,  the  outlook  for  the 
contribution of net exports to economic growth 
is  only  slightly  affected  and  is  projected  to  be 
at 0.2 pps. in 2022 (see Graph I.2.21). In 2023, 
the  growth  contribution  of  net  exports  is 
expected to further decrease to 0.1 pps. 

Private consumption in the EU is expected 
to  grow  by  3.3%  in  2022  and  by  2.7%  in 
2023.  As  a  result,  the  projected  expansion  of 
private  consumption  in  2022  is  weaker  than 
expected in the Autumn Forecast last year. For 
2023, 
for  private 
consumption  has  been  revised  slightly  up 
(albeit from a lower base).  

the  growth  projection 

Net  exports  are  expected  to  contribute 
in  2022. 
only  mildly  to  GDP  growth 
Volumes  of  exports  and  imports  of  goods  and 
services  in  the  EU  are  forecast  to  grow  less 
than  previously  expected.  This  reflects  weaker 
global  demand,  intensified  and  new  supply 
disruptions,  and  some  adjustment  to  soaring 
prices,  but  also  the  impact  of  sanctions  and 
countersanctions.  The  projections  for  export 
market  growth  are  revised  down  for  the  EU  in 
2022  and  2023,  which  is  in  line  with  the 
deterioration  of  the  global  trade  outlook  (see 
Section  I.2.1).  In  the  EU, the  outlook  for  export 
market  growth  has  especially  deteriorated  in 
Member  States  that  formerly  had  close  trade 
links  with  Russia,  mostly  economies 
in 
proximity  to  Russia.  Similar  differences  had 

There  is  considerable  heterogeneity  in 
growth  projections  across  Member  States 
(see Graph I.2.22). In the last quarter of 2021, 
output 
including 
in  seven  Member  States, 
Germany,  Spain  and  Italy,  had  not  reached  its 
pre-pandemic  level  from  the  fourth  quarter  of 
2019.  The  downward  revisions  to  GDP  growth 
in  2022  imply  that  this  mark  will  be  reached 
later than expected in the  winter, in the fourth 
quarter of  2022 in  Germany and Italy (instead 
of the second quarter), and in the third quarter 
of 2023 in Spain (instead of the fourth quarter 
this  year).  These  differences  can  be  partly 
explained  by  structural  features,  such  as  the 
importance of tourism and manufacturing, and 
restrictions  and 
by  how  pandemic-related 
supply  chain  disruptions 
these 
impacted 
sectors.  The  effects  of  the  Russian  invasion  of 
Ukraine  have  extended  the  list  of  factors 
explaining  heterogeneous  growth  outcomes. 
Proximity  to  the  war  region,  exposure  to  trade 
with Russia and Ukraine, dependency on energy 
imports  from  Russia,  and  the  high  degree  of 
openness  of  the  EU  economies  define  the 
vulnerability  of  Member  States  to  the  new 
events (see Box I.2.2). 

32 

859095100105110115-10-8-6-4-202468101920212219202122202122Graph I.2.20: Households' income, demand and savingsNet taxes, transfersNon-labour incomeLabour incomeEUGDIESFRDEITEUGrossdisposable income growth(%)Private consumption(2019=100, rhs)Change in savings rate since2019 (pps.)-50-40-30-20-1001020304050-12-10-8-6-4-202468101219202122231920212223Graph I.2.21: Exports and external demand breakdownGoodsServicesEUDEFRITESExportsgrowth (%)Changein serivces' exports from 2019(%) 
      
      
Economic outlook for EA and EU 

of 2021 pulled an additional 1.3 million people 
into  employment,  0.6%  up  from  the  previous 
quarter.  A  reduction  in  unemployment  and  an 
inflow  from  inactivity  fuelled  the  increase  in 
employment  levels by  about  equal  shares.  The 
activity rate in the  EU increased by 0.2  pps. to 
rate 
64.5%,  whereas 
decreased  to  6.5%,  from  6.8%  in  the  previous 
quarter. 

the  unemployment 

after 

growth.  With 
growth 

The  public  sector  contributed  most  to 
virtually 
employment 
uninterrupted 
initial 
contraction in early 2020 and nearly 1.6 million 
(3.2%) more employees compared to 2019-Q4, 
the  sectors  of  public  administration,  defence, 
education,  human  health  and  social  work 
activities(13)  contributed  markedly  to  the  good 
performance of the labour market in 2021.  

the 

The pandemic-induced labour market slack 
was  re-absorbed  by  the  end  of  last  year. 
Labour  market  slack,  as  measured  by  the 
indicator proposed by Eurostat,(14) decreased to 
13% of the extended labour force in the EU in 
the fourth  quarter of 2021, 0.4  pps.  below the 
rate recorded in the previous quarter, as well as 
before the outburst of the pandemic. The share 
of the unemployed and those available to work 
but  not  seeking  a  job,  two  categories  that 
contributed  substantially  to  the  sharp  increase 
in  labour  market  slack  in  early  2020,  largely 
returned 
the 
pandemic.  

recorded  before 

levels 

to 

(13)  National accounts data. The combination of sectors O, 
P  and  Q  of  NACE  Rev.  2  of  the  Labour  Force  Survey 
data leads to the same conclusions. 

(14)  According  to  Eurostat’s  definition,  labour  market  slack 
is  the  sum  of  unemployed  persons,  underemployed 
part-time  workers,  persons  seeking  work  but  not 
immediately  available  and  persons  available  to  work 
but  not  seeking,  expressed  as  a  percentage  of  the 
‘extended 
the 
aforementioned  sum  and  the  employed  persons.  The 
presented  figure  covers  the  age  class  of  15  to  74 
years. 

force’,  which  adds  up 

labour 

33 

2.4.  LABOUR MARKET 

The  recovery  from  the  COVID-19  crisis 
was  strongly  felt  in  the  labour  market. 
Last  year,  the  EU  economy  created  more  than 
5.2 million jobs and attracted nearly 3.5 million 
more people into the labour market. In addition, 
the number of unemployed decreased by nearly 
1.8 million and unemployment rates fell below 
previous  record  lows  at  the  end  of  2021.  This 
strong  performance  was  broad-based  across 
countries,  sectors  and  socio-economic  groups. 
Still,  total  hours  worked  and  hours  worked  per 
employee  remained  below  their  pre-pandemic 
levels in the EU and most Member States (see 
Graph I.2.23).  

The EU labour market ended the year with 
record outturns for several key metrics. In 
the 
last  quarter  of  2021,  EU  headcount 
employment  grew  for  the  third  consecutive 
quarter,  reaching  its  highest  level  on  record. 
According  to  Labour  Force  Survey  data,  the 
strong  pace  of  job  creation  in  the  last  quarter 

02468101214Graph I.2.22: Real GDP growth, EU and Member States, 2021-2023Other MSEUNLPLITDEESFR%forecast20212023Note: The bars for all 27 Member States are ranked by size. 20225.42.72.3858891949710010319-Q420-Q120-Q220-Q320-Q421-Q121-Q221-Q321-Q4Graph I.2.23: Employment in the EUHeadcount employmentHours workedHours worked per headIndex,2019-Q4=100 
       
       
 
                                                        
European Economic Forecast, Spring 2022 

(Continued on the next page) 

34 

Box I.2.2: Member States’ vulnerability matrixReflecting geographical proximity and important trade links, the war in Ukraine weighs on the European economy more severely than on other major economies, such as the US or China. In turn, within the EU, Member States have different degrees of exposure to some of the channels of transmission of the impact of the war described in Chapter 1 and Table I.1.1 – namely, the channels for trade, commodities and financial markets. By ranking Member States by degree of exposure to 13 dimensions of vulnerability, the matrix presented in this analysis has supported the assessments of the economic outlook for the EU Member States that are presented in this forecast. An unweighted average of the 13 rankings provides a rough indication of the overall position of a Member State vis-à-vis the others. The energy part of the matrix includes energy intensities (total, for gas and for Russian gas) as well as a measure of dependency on Russian gas and two indicators of household budgets’ exposure to energy prices. The total energy intensity of an economy refers to the amount of all energy (oil, gas, coal and other), expressed in TeraJoules, that is used in the generation of value added. It reflects the structure of the economy, most notably the prevalance of energy-intensive services and industries, such as air transport, manufacturing of petroleum products or basic metals. The other two intensity metrics focus on, respectively, the use of gas and of Russian gas only. The trade and value chains part of the matrix looks at various measures of trade linkages with Russia, Ukraine and Belarus. This includes exposure through direct trade shares in gross goods and services exports (to all three countries), as well as exports of travel services (to Russia only), or more complex value-chains links from the exports and non-energy imports based on the most recent input-output tables (for Russia only). Finally, the asset part looks at two types of asset exposure. The Baltic and Eastern and Central European countries emerge as the most vulnerable Member States, largely due to the high energy intensity of their economies and the importance of Russia in trade, particularly for imports of gas. Cyprus also appears significantly exposed to the fallout from the war, due to the high share of its services’ exports to Russia and the high value of Russian assets held by its residents. Among the large EU Member States, Poland appears most vulnarable, largely reflecting its relatively high trade exposure and the importance of energy in the households’ consumption basket. Netherlands, Germany and Italy follow, with an exposure that is broadly in line with the EU average. For the Netherlands, the vulnerability largely relates to assets and households’ vulnerability to high energy prices, while for Italy and Germany it reflects a combination of the importance of Russian gas imports in gross available energy, asset exposure and households’ vulnerability. Finally, France and Spain emerge, on average, as the least exposed large EU Member States. Portugal and Malta close the ranking. Methodology and sources: 1) Total energy/gas/Russian gas intensity (columns 1-3) is defined as the ratio of total energy/gas/Russian gas to GVA that is embodied in the global value chains of products purchased by residents for final use (i.e. consumption, investment and inventories), including through intermediate inputs, independently of where they were produced. The ranking for Russian gas intensity (column 3) may differ from that based on the share of Russian gas in total available gas (column 4) because (i) the former includes a range of intermediate goods for which Russian gas may not be so relevant along the value chain of the final use product, and (ii) even high values of the latter may not translate into high intensity if gas is less important for generation of the value added compared to other energy sources. Source: JRC calculations based on World Input-Output Database Environmental Accounts. Update 2000-2016 and Eurostat 2019 FIGARO EU inter-country supply, use and input-output tables  2) The ratio of Russian gas imports to total available gas reflects the extent to which Member States rely on gas imported from Russia. Total available gas is calculated as imports + domestic production – exports + stock changes. A ratio above 100% indicates that the country re-exports part of the Russian gas it imports, as is the case for e.g. Hungary. Data refer to 2020. For the countries that do not report imports from Russia in their gas statistics or import Russian gas from other Member States, the following assumptions are made by the Eurostat:   
 
 
 
     
 
Economic outlook for EA and EU 

Box (continued) 

(Continued on the next page) 

35 

Denmark: 50% of net imports from Germany are assumed to be from Russia Estonia: 80% of imports from Latvia are assumed to be from Russia Croatia: 80% of net imports are assumed to be from Russia Austria: 80% of net imports are assumed to be from Russia Romania:  80% of imports from Hungary are assumed to be from Russia Slovenia: 80% of imports from Austria are assumed to be from Russia Finland: 80% of imports from Estonia are assumed to be from Russia Source: Eurostat, EU energy mix and import dependency 3) Share of energy in the HICP basket in 2022, and average contribution of annual energy inflation to headline HICP in the first three months of 2022. Source: Own calculations based on the Eurostat data  4) Sum of exports to Russia, Ukraine and Belarus, as % of GDP in 2021 (goods) and 2019 (services). Source: Eurostat 5) Share of exports of travel services to Russia (BoP statistics) in 2021, as % of GDP. For DE, data on travel services exports to Russia are not available and the indicator is therefore proxied by the share of tourist nights spent by Russians to total tourist nights spent (assuming that the ratio of RU tourist nights in total nights to the share of Russia in travel services exports is the same as for FR.  Source: Eurostat         Table 1:Vulnerability matrixTotal energy intensity 1Total gas intensity 1RU Gas intensity 1Ratio of RU gas in gross available gas 2Energy weight in the HICP consumption basket 3Contribution of energy to annual HICP inflation 3Direct goods exports to RU, UA and BY 4Direct services exports to RU, UA and BY  4Travel services exports to RU 5Domestic VA embodied in exports to RU 6Non-energy RU import content in final demand 7Total exposure to RU assets 8Banks' consolidated exposure to RU assets 9as % of GVA (TJ/EURm)as % of GVA (TJ/EURm)as % of GVA (TJ/EURm)RU gas imports as % of total gross available gas% of total expenditurespps., 2022-Q1 averageLV8.12.11.7100.116.23.47.82.20.11.02.62.7-EE10.41.51.186.515.95.83.51.80.10.82.33.7-BG13.12.01.272.813.43.11.41.40.10.71.41.0-LT6.81.71.050.512.85.312.53.90.11.01.80.9-CZ8.01.40.986.011.73.22.30.80.00.70.81.0-SK9.01.81.275.215.12.52.30.70.00.71.00.4-HU7.31.81.4110.411.31.23.30.50.00.60.71.3-PL8.41.30.645.514.52.83.00.90.00.60.80.3-SI7.21.10.581.013.22.32.40.30.01.20.61.6-CY8.01.00.40.09.72.50.312.61.92.82.2713.3-FI6.60.90.692.49.52.51.70.50.00.90.92.10.0HR6.61.20.655.013.21.70.50.50.10.50.60.1-EL7.91.10.438.911.53.90.30.60.10.30.60.00.1NL4.21.20.435.811.35.81.20.30.00.40.311.60.7EU5.11.00.441.111.33.30.90.30.00.40.43.4-DE4.30.90.458.912.13.01.00.10.00.50.41.00.2IT4.41.10.440.49.74.00.60.10.00.40.41.21.2AT4.30.90.458.68.72.30.70.30.00.50.43.03.7BE5.21.40.37.910.76.21.10.10.00.40.40.50.0RO7.61.70.415.512.12.70.80.10.00.30.60.0-LU2.30.60.127.212.74.10.30.5-0.60.185.3-IE4.51.00.10.08.92.80.20.90.00.90.310.80.0FR5.40.70.220.010.32.20.30.20.00.30.31.10.9SE5.20.50.213.99.62.20.60.20.00.30.41.20.0ES4.30.80.110.511.74.90.20.10.00.30.20.20.1DK3.60.50.252.48.92.70.50.30.00.30.31.0-PT5.10.90.19.68.01.30.10.10.00.10.20.00.1MT5.00.60.10.06.70.00.11.00.00.40.40.2-AREA OF EXPOSUREas % of GDPas % of GDPNotes:  Blank cells – no data available.  Countries sorted by the average (unweighted) rank in the thirteen exposure dimensions (columns 1 – 13). Colour coding (separate within each exposure dimension): intense red – top 10% most exposed countries, intense yellow – median exposed countries; intense green – bottom 10% exposed countries.ENERGYTRADE AND VALUE CHAINSASSETS 
 
 
     
 
European Economic Forecast, Spring 2022 

Box (continued) 

Recovery  in  hours  worked  lagged  behind 
headcount 
suggesting 
employment, 
remaining  underutilisation  of  labour.  With 
economic activity dampened by a new wave of 
the pandemic, the use of job retention schemes 
increased  again  in  the  fourth  quarter  of  last 
year.(15)  Total  hours  worked  increased  by  less 
than  headcount  employment,  by  0.2%  in  the 
fourth quarter 2021. Average hours worked per 
employed  person  thus  decreased  after  three 
quarters  of  growth,  closing  the  year  at  1.1% 
below  the  pre-pandemic  level.  This  was  the 
case  in  all  major  economic  sectors  except 
insurance 
agriculture  and 
activities.  While  during  the  pandemic 
job 
retention  schemes  played  a  crucial  role  in 
protecting  jobs  and  incomes,  they  may  have 
contributed to the drop in hours worked and to 
a  muted  responsiveness  of  labour  supply  to 
changing sectoral patterns of demand. (16) 

financial  and 

increase 

was  reflected  in  higher  vacancy  rates  and 
survey  data  throughout  last  year.  All  major 
sectors reported increasing vacancy rates since 
the  trough  in  the  second  quarter  2020.  With 
unemployment rates at record-low levels, and a 
rapid  and  substantial 
in  unfilled 
vacancies,  labour  markets  in  the  EU  tightened 
considerably  by  the  end  of  last  year.  The 
Commission’s  surveys  confirm  strong  broad-
based  labour  demand.  While  job  creation  was 
widespread across sectors in the fourth quarter 
of  2021,  the  share  of  managers  reporting 
labour  shortages  as  a  factor  limiting  their 
production  increased  in  industry,  services  as 
well  as  construction.  The  share 
increased 
further  in  the  first  quarter  of  this  year  and 
the  second.  Labour 
in 
broadly  stabilised 
shortages  were  particularly  pronounced 
in 
several  service  sectors,  such  as  computer 
programming,  employment  activities  and  land 
and air transport.(17)  

strong 

labour  market 

The 
rebound 
resulted  in  unmet  labour  demand.  The 
strong  and  sudden  recovery  of  labour  demand 

(15)  Workers  covered  by  job  retention  schemes  accounted 
for 1.6% of the extended labour force in December last 
year, according to the estimates of the ECB. The share 
was estimated to fall to 1.3% in February 2022. 

(16)  Jean-Benoît  Eyméoud,  Nicolas  Petrosky-Nadeau,  Raül 
Santaeulàlia-Llopis,  and  Etienne  Wasmer,  2021, 
“Contrasting  U.S.  and  European  Job  Markets  during 
COVID-19.” FRBSF Economic Letter 2021-05. 

36 

of 

composition 

employment 
The 
growthreflects 
the 
demand  rebound  and  trends  accelerated 
by  the  pandemic.  Employment  was  created 
especially  in  occupations  that  are  more  easily 

the  structure  of 

(17)  Codes  J62,  N78,  H49  and  H51  of  NACE  rev.  2 
in 
classification.  For  more  details,  see  Box  1.1. 
European  Commission  (2022),  “European  Economic 
Forecast: Winter 2022”, Institutional Paper 169,. 

6) The indicator is defined as the domestic value added embodied in total country’s exports to Russia as % of GDP. The indicator includes both direct exports of goods for intermediate and final uses as well as intermediate goods exported to third countries and eventually pruchased by residents in Russia (embodied in a different good for its final use). Source: JRC calculations based on the Eurostat 2019 FIGARO EU inter-country supply, use and input-output tables   7) The Russian non-energy imports content to satisfy Member States’ final demand includes: i) direct non-energy imports by a reporting Member State of intermediate and final goods and services from Russia, ii) intermediate non-energy imports from Russia via another EU  Member States to produce final products consumer in a reporting Member States, and iii) intermediate non-energy imports from Russia via non-EU countries (e.g. US, China) to produce final products purchased by residents in a reporting Member State. Source: JRC calculations based on the Eurostat 2019 FIGARO EU inter-country supply, use and input-output tables   8) Total stock of Russian assets held by EU countries in the form of stocks, bonds, FDI and other investment. Source:  FinFlows database updated and maintained by JRC and ECFIN, 2022 9) Total stock of RU assets on banks’ balance sheets in 2021-Q3, as % of 2019 GDP. Source: BIS   
                                                        
                                                        
 
     
 
 
teleworkable,  a  trend  strengthened  by  the 
COVID-19 pandemic. Employment growth in the 
information and communication sector resulted 
in  8.5%  additional  jobs  since  the  beginning  of 
2020.  With  booming  demand  following  the 
reopening of economies as of spring last year, 
employment  in  wholesale  and  retail  trade, 
transport,  accommodation  and  food  service 
though 
activities  performed 
it 
strongly, 
remained  below  pre-pandemic 
levels,  as 
tourism  did  not  fully  recover.  By  comparison, 
employment  growth 
in  manufacturing  was 
subdued up until the third quarter 2021, before 
picking up at a rate of 0.5% in the last quarter 
of  2021,  with  employment  in  the  sector  still 
below its pre-pandemic reading.  

Contrasting developments in hours worked 
and  headcount  employment  paint  a 
different  picture  on  labour  productivity. 
Unlike  headcount  employment,  hours  worked 
fell  steeply  in  early  2020.  As  a  result,  labour 
productivity  per  worker  declined  strongly  and 
only  closed  the  gap  with  it  pre-pandemic  level 
at the end of last year. By contrast, productivity 
per  hour  worked  continued 
increase 
throughout  2020  and  2021  above  its  pre-
pandemic  level,  albeit  at  a  slower  rate  than 
before the COVID-19 crisis. 

to 

Despite  the  tightening  labour  market  and 
sharply  rising  consumer  prices,  wages 
have so far remained subdued. The indicator 
of  negotiated  wage  rates  in  the  euro  area 
increased by 1.6% in the fourth quarter of last 
year  compared  to  the  same  quarter  of  2020. 
Although  probably  still  distorted  by  the  impact 
of  job  retention  schemes,  the  annual  rate  of 
change  of  compensation  of  employees  per 
head  reached  4%  in  the  fourth  quarter  2021, 
exceeding  the  post-2009  average.  Given  the 
average  inflation  rate  of  4.6%  in  the  last 
quarter of 2021, real wages actually declined.  

labour 

market 
Pandemic-induced 
inequalities  have  been  partially 
re-
absorbed.  The  COVID-19  pandemic  had 
disproportionately  hit  population  groups  that 
were  already 
facing  worse  employment 
prospects:  notably  the  young,  low-skilled  and 
workers  on  temporary  contracts.  By  contrast, 
women and men were not affected differently. 
lowest 
Employment 
educational  attainment  had  not  yet  started  to 
recoverby  the  end  of  last  year.  By  contrast, 

those  with 

levels  of 

Economic outlook for EA and EU 

employment of young workers returned to pre-
pandemic levels thanks to strong growth in the 
last  year. 
fourth  quarters  of 
third  and 
Employment  and  labour  force  participation  of 
the  elderly,  which  were  only  mildly  affected  in 
2020,  kept  increasing  during  2021.  Labour 
force  participation  and  employment  of  women 
and  men  continued  increasing  at  around  the 
same pace since the trough in 2020.  

in  the 

increased 

employment 

rates  decreased 

Labour markets improved in most Member 
last  quarter  of  2021. 
States 
and 
Headcount 
unemployment 
in  most 
Member States. However, the recovery from the 
pandemic-induced crisis remained sluggish in a 
number  of  countries. 
labour 
markets  in  Bulgaria,  Czechia,  Germany,  Latvia, 
Romania  and  Slovakia  continued  to  lag  behind 
in  terms  of  hours  worked,  employment  and 
unemployment  statistics.  By  contrast,  Greece, 
France  and  Croatia 
strong 
showed  a 
performance 
in  both  hours  worked  and 
in 
headcount  employment,  as  well  as 
unemployment rate, beating their pre-pandemic 
levels. 

In  particular, 

Labour market conditions are expected to 
improve further over the forecast horizon. 
Steady  declines 
in  monthly  unemployment 
rates this year, from 6.4% in December to 6.2% 
in  March,  indicate  likely  further  employment 
gains.  In  March,  the  employment  PMI  foresaw 
continued  employment  growth  across  the  euro 
area at a slightly higher pace compared to the 
previous three months. In addition, Commission 
surveys indicate that further job creation in the 
short  term  may  still  take  place  in  all  surveyed 
sectors.  With  the  gradual  lifting  of  pandemic 
restrictions,  managers  in  the  services  sector 
reported  an  increase  in  hiring  intentions  in 
February,  March  and  April,  following  a  two-
month  soft  patch.  Employment  expectations  in 
construction  remained  at  around  the  same 
elevated  level  for  four  consecutive  months, 
slightly below the all-time high levels recorded 
in autumn last year. By contrast, the results of 
the  March  and  April  surveys  in  industry  show 
some  easing  of  employment  expectations,  as 
confidence  in  the  sector  has  been  hit  by  the 
Russian invasion of Ukraine. 

is  forecast  to 
Headcount  employment 
increase  by  1.2%  in  the  EU  this  year 
before easing to 0.7% in  2023. The annual 

37 

 
European Economic Forecast, Spring 2022 

employment  growth  figure  this  year  is  largely 
driven  by 
the  strong  growth  momentum 
gathered  in  the  second  half  of  last  year.  Job 
creation is expected to ease markedly this year, 
amid a soft patch brought by the fading impact 
of  Omicron  and  the  war  in  Ukraine.  As  labour 
market tightness persists across the EU, labour 
force  growth  is expected  to  be  supported  by  a 
continued re-activation of  people following the 
slump  in  the  labour  force  in  2020.  People 
fleeing  the  war  in  Ukraine  to  the  EU  are 
expected 
labour  markets  only 
gradually, with  tangible  effects  only  from  next 
year(18).  Headcount  employment  is  forecast  to 
increase in all Member States over the forecast 
horizon at markedly varying rates. Employment 
levels  in  nine  Member  States  are  forecast  to 
remain below their pre-pandemic levels. 

to  enter 

Unemployment  rates  are  forecast  to 
decline further, to 6.7% this year and 6.5% in 
2023 in the EU (see Graph I.2.24). Both a lower 
number  of  unemployed  and  an  increase  in  the 
labour  force  are  expected  to  contribute  to  the 
reduction  in  the  rate.  Unemployment  rates  are 
forecast to fall in most Member States. 

Compensation  of  employees  per  head  is 
forecast  to  only  partly  compensate  for 
inflation  this  year.  In  the  EU,  compensation 
of  employees  per  head  is  forecast  to  increase 
by  3.8%  in  2022  and  3.7%  in  2023.  These 
growth  rates  are  above  those  recorded  before 
the  pandemic.  This  year,  however,  real  wages 
are  expected  to  decline,  before  increasing 
moderately  next  year.  Against  the  background 
of  soaring  production  costs  and  increased 
uncertainty  on  the  outlook  for  growth  and 
employment, concerns about job security rather 

(18)  See assumptions on the incorporation of people fleeing 

Ukraine in the forecast in Box I.1.1 

38 

than  pay  increases  are  likely  to  continue  to 
have  the  upper  hand  in  wage  deals.  At  the 
Member States level, growth of nominal wages 
is  expected  to  vary  greatly,  with  real  wages 
expected to decline in most Member States this 
year. 

The  outlook  for  labour  productivity  is 
subdued.  Amid  significantly  easing  economic 
labour  productivity  per 
activity,  growth  of 
employed  person 
is  expected  to  decrease 
markedly  to  1.2%  this  year,  before  increasing 
slightly  to  1.5%  in  2023,  still  above  a  long-
term average.  

2.5. 

INFLATION 

(year-on-year) 

Headline inflation in the euro area surged 
to  7.5% 
in  April,  the 
in  the  history  of  the 
highest  rate 
monetary  union  and  almost  double  its 
previous  peak  in  mid-2008.  Inflation  has 
been  picking  up  momentum  since  early  2021, 
exceeding 
with 
expectations.  A  combination  of  factors  are 
exerting  upward  pressures  on  prices:    surging 

consistently 

outturns 

024681012141618CZDEMTPLHUNLSIDKATIELUBGROPTBEHRSKEUEEFIEASELVLTCYFRITESELGraph I.2.24: Unemployment rates in the EU20232019%(Annual percentage change)20202021202220232021202220232020202120222023202120222023Population of working age (15-64)0.20.10.10.10.20.20.20.10.00.00.00.10.10.1Labour force-1.10.90.70.50.80.70.5-1.00.50.80.50.80.60.4Employment-1.51.11.30.80.81.00.7-1.40.71.20.70.81.00.6Employment (change in million)-2.51.82.01.21.31.71.1-2.91.52.61.51.72.01.4Unemployment (levels in millions)12.812.611.911.612.912.312.115.215.014.313.915.114.414.0Unemployment rate (% of labour force)8.07.77.37.07.97.57.37.27.06.76.57.16.76.5Labour productivity, whole economy-3.24.21.11.33.02.71.4-3.34.61.21.53.32.91.6Employment rate (a)61.962.563.363.762.262.763.061.461.962.763.161.862.462.8(a)  Employment as a precentage of population of working age.  Definition according to structural indicators. See also note 6 in the Statistical Annex. For the EU and EA, this table now also displays employment in persons, limiting the comparability to figures published in previous forecasts.Table I.2.4:Labour market outlook - euro area and EUEuro areaEUSpring 2022 forecastAutumn 2021 forecastSpring 2022 forecastAutumn 2021 forecast 
                                                        
        
 
 
 
   
 
 
Economic outlook for EA and EU 

energy  and  food  commodity  prices  and  a  host 
of  supply  and  logistics  bottlenecks  –  both 
originating from pandemic-induced adjustment, 
but  exacerbated  by  the  outbreak  of  the  war. 
Inflation went up from 4.6% in the last quarter 
of  2021  to  6.1%  in  the  first  quarter  of  2022, 
more  than  one  percentage  point  higher  than 
projected  in  the  Winter  2022  interim  Forecast. 
In  non-euro  area  countries  inflation  was  even 
higher,  implying  an  increase  in  EU  inflation 
from 4.9% in the last quarter of 2021 to 6.6% 
in  the  first  quarter  of  2022.  Core  inflation 
(headline 
inflation  excluding  energy  and 
unprocessed  food) increased to 2.8% in  2022-
Q1 in the euro area, up from 2.4% in 2021-Q4, 
and increased further to 3.9% in April. 

of 

headline 

Dispersion  in  energy  inflation  drives  the 
widening 
inflation 
differentials  across  EU  Member  States. 
Dispersion  of  headline  inflation  across  the  EU, 
whether  measured 
terms  of  standard 
in 
deviation  or  simple  range,  widened  in  the  first 
quarter  of  2022  (see  Graph  I.2.25),  ranging 
from 4.2% in France to 13.9% in Lithuania. The 
range was far wider for energy inflation, which 
went  from  0%  in  Malta  to  70.2%  in  the 
Netherlands.  Looking  ahead,  dispersion  of 
inflation  is  set  to  persist  given  that  some 
countries  have  already  absorbed  most  of  the 
increase in gas prices while for others the pass-
through will be delayed.. 

its  peak 

Energy  remains  the  main  driver  of 
headline  inflation  in  the  euro  area.  The 
April  reading  for  the  HICP  energy  component 
posted  a  38%  annual  rate,  somewhat  down 
from 
(44.4%).  These 
in  March 
dynamics  reflect  surges  in  oil  and  gas  prices. 
The  Brent  oil  price  exceeded  USD  100  per 
barrel in April, substantially above its price one 
year earlier in April 2021 (USD 65) and still well 
above the 70-80 USD range in the last quarter 
of  2021.  Natural  gas  (TTF)  prices  climbed 
further  in  March  amidst  high  volatility  as 
markets 
the 
consequences of the war in Ukraine: it hovered 
just  above  EUR  100/MWh  since  mid-March, 
which  is  around  five  times  higher  than  in  the 
first  quarter  of  2021.  As  gas-fired  electricity 
plants  are  often  wholesale  price  setters, 
electricity  prices  have  also  registered  steep 
increases:  retail  electricity  inflation  increased 
from  negative  rates  in  the  first  quarter  of 
2021, to 34.3% in the first quarter of 2022.  

scrambled 

to  work 

out 

The  pass-through  from  energy  commodity 
to  retail  prices  varies  across  the  EU, 
reflecting  differences  in  national  energy 
markets. In addition, many national authorities 
have  recently  taken  measures  to  limit  the 
impact on households, such as price caps or tax 
reductions.  Established 
long-term  market 
contracts at both wholesale and consumer level 
also  played  a  role  in  suppressing  short-term 
volatility  in  prices.  However,  since  most  of 
these 
price-adjustment 
have 
mechanisms and/or come to be renewed with a 
delay, they only postpone price adjustments.  

contracts 

food 

increasing 

Food  prices  have  been  rising  on  the  back 
of 
input  costs  and  supply 
bottlenecks.  (19)  In  the  first  quarter  of  2022, 
food  prices  increased  by  4.9%  year-on-year  in 
the  euro  area  (5.8%  in  the  EU),  of  which  the 
more  volatile  unprocessed 
inflation 
increased by 6.4% while that of processed food 
did  so  by  3.6%.  Futures  prices  for  the  main 
traded agricultural commodities (as at the cut-
off  date)  pointed 
to  further  food  price 
pressures  in  the  second  quarter.  In  line  with 
this,  food  (total)  prices  accelerated  further  in 
April,  with  the  month-on-month  growth  rate 
jumping  by  1.9%  (6.4%  year-on-year),  above 
the 1% increases registered in all the first three 
months  of  the  year.  Food  supply  chains  are 
very  diverse  in  terms  of  their  input  mix  and 
only  a  part  of  the  recent  increase  in  inputs  or 
agricultural  commodity  prices  gets  passed  on 
to consumers. In the first stages, domestic food 
prices  are  determined  either  by  the  output 

(19)  Prices  of  fertilizers  are  strongly  linked  to  the  price  of 

gas, which is used as a production input.  

39 

0510152025Jan-00Jan-03Jan-06Jan-09Jan-12Jan-15Jan-18Jan-21Graph I.2.25: Inflation dispersion across Member StatesHICPEnergyStandard deviation 
          
                                                        
European Economic Forecast, Spring 2022 

items  are 

prices  set  by  EU  farmers  (also  referred  as 
agriculture  or  farmers’  prices)  or  by  imported 
then 
food  prices.  Many  food 
processed  and,  thus,  the  domestic  producer 
prices  (also  referred  to  as  manufactured  or 
processor prices)  become another intermediate 
layer.  Using  the  period  between  January  2021 
and  March  2022  for  comparison,  the  World 
Bank’s global energy and fertilizer price indices 
(measures  of  input  costs)  rose  by  132%  and 
186%, respectively (see Graph I.2.26). Its global 
agriculture  index,  a  measure  of  global  food 
prices,  rose  by  29%  over  the  same  period.  In 
the  EU  domestic  market,  since  January  2021 
imported  food  prices  increased  by  19%  (latest 
data  January  2022),  farmer  output  prices  by 
38%,  domestic  producer  food  prices  by  11% 
(latest  data  February)  and  consumer  food 
prices  by  7%.  Of  the  latter,  unprocessed  and 
processed  food  prices  increased  by  7.8%  and 
4.6%, respectively (see Graph I.2.27).(20) Looking 
at  more  recent  co-movements,  farmer  output 
prices  have  outpaced  producer  and  consumer 
prices,  which  point  to  further  price  pressures 
along the food supply chain this year. 

The increase in energy and food prices has 
distributional  consequences.  According  to 
the Household Budget Survey, EU households in 
the  first  quintile  of  the  income  distribution 
spend  approximately  16%  of  their  income  on 
food and non-alcoholic beverages, compared to 

(20)  The EU’s Common Agricultural Policy, as well as tariffs 
and  a  relatively  strong  self-sufficiency  in  food,  may 
explain why the agriculture (farmers) price index in the 
EU is less volatile than comparable international global 
food indices. Still, the EU relies on imports for products 
like oilseeds, oilmeals, vegetable oils and protein crops, 
where the global import price is more relevant for price 
monitoring. 

40 

12%  in  the  fifth  quintile.  Similarly,  the  first 
quintile spends 7% on electricity, gas and other 
fuels,  compared  to  4.5%  of  the  fifth  quintile. 
Differences 
in  consumption  patterns  have 
implications  for  national  headlline  inflation 
rates. The higher weight of food and energy in 
the  consumption  basket  of  Central  and 
European  countries  amplifies  the  transmission 
of commodity price shocks to headline inflation, 
contributing 
these 
countries. 

to  higher 

inflation 

in 

Inflationary  pressures  are  picking  up  also 
in  non-energy 
industrial  goods  and 
services.  In  the  first  quarter  of  2022,  price 
growth  rose  by  2.9% 
in  the  non-energy 
industrial  goods  and  by  2.5%  in  services.  Both 
categories 
in  April 
increased  even  further 
according  to  the  flash  estimate.  Non-energy 
industrial goods inflation is reacting with a lag 
to  the  surge  in  producer  price  inflation  since 
last  year  (25.4%  in  2022-Q1).  The  increase  in 
services  inflation  is  picking  up  the  recovery  of 
transport, 
many  services 
holiday 
packages, 
the  pandemic 
following 
restrictions  .  More  generally,  the  spreading  of 
inflationary  pressures  is  captured  by  median 
inflation in the euro area, which picked up to an 
annual rate of 3.3% in March, from an average 
of 2.3% in 2021-Q4 in the euro area.  

accommodation 
the  easing  of 

including 
and 

items, 

A  big  part  of  the  recent  inflation  is 
imported,  but  domestic  price  pressures 
have  also  increased.  In  2021  the  GDP 
deflator  increased  by  2.0%,  compared  to  an 
HICP rate of 2.6%. The GDP deflator measures 
the  change  in  the  price  of  all  domestically 
produced,  rather  than  domestically  consumed, 
goods  and  services.  Therefore,  the  change  in 

0255075100125150175200Energy (global)Fertiliser (global)Agriculture (global)Import price (EU)Farmers output prices (EU)Domestic Producer price (EU)Consumer price (EU)Graph I.2.26: Increase in food and food input pricesSources: World Bank, Eurostat%ch.since Jan 2021Notes: Increase of prices between Jan 2021 and March 2022 or latestavailable. Energy, fertiliser and agriculture global prices are indices from the World Bank. EU prices are from Eurostat.90100110120130140Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Graph I.2.27: Pass-through of food prices along the supply chain in the EUFarmer output priceDomestic Producer priceConsumer priceIndex,2020=100 
       
                                                        
      
the  deflator  does  not  generally  coincide  with 
the  rate  of  consumer  price  changes  as  it  does 
not  take  account  of  the  price  of  imports. 
Sudden swings in import prices, as the ones we 
are now experiencing (9.6% in 2021), thus drive 
a  wedge  between  the  HICP  and  GDP  deflator. 
Since a large part of the recent changes in the 
import  deflator  is  driven  by  changes  in  energy 
commodity  prices  –  especially  oil  –  the  latter 
correlate  well  with  the  gap  between  the  HICP 
and GDP deflator. 

inflation 

Inflation  in  the  euro  area  is  projected  at 
6.1%  in  2022,  before  falling  to  2.7%  in 
2023.  For  2022  as  a  whole,  this  represents  a 
considerable  upward  revision  compared  to  the 
Winter  2022  interim  Forecast  (3.5%).  Inflation 
is  expected  to  peak  at  6.9%  in  the  second 
quarter, before slowing and closing the year at 
5.2%  (see  Graph  I.2.28).  Food  inflation  is 
projected to register a considerable increase in 
the second quarter - already evident in the April 
flash  reading  -,  while  energy 
is 
expected to peak before moderating thereafter 
as base effects from last year start detracting 
from its yearly rate of growth. Food commodity 
futures  point  to  further  price  pressures  in  the 
second  quarter  followed  by  a  moderation 
towards  the  end  of  the  year.(21)  The  impact  of 
supply  side  bottlenecks  on  price  pressures  is 
also  expected  to  diminish  gradually  later  this 
year  with  the  projected  slowdown  in  global 
demand.  The  deterioration  of  the  euro  NEER, 
which  raises  the  price  of  imported  goods,  is 
another  contributing  factor  behind  the  upward 
revision  for  the  year.  According  to  data 
available  up  to  April,  the  carry-over 
(i.e. 
inflation assuming no  further month-on-month 
price  increases  for  the  rest  of  the  year)  would 
imply a high inflation rate of 6.2% for the year 
as  a  whole.  This  forecast  thus  implies  no 
further  aggregate  price  increases  within  the 
year,  as  the  quarter  on  quarter  fall  in  energy 
inflation  is  expected  to  outweigh  increases  in 
the other components. Core inflation is forecast 

in 

(21)  Judging by the prices of food futures contracts expiring 
in 2022-Q2, global food prices are set to increase yet 
again 
the  coming  months,  before  gradually 
moderating in general towards the end of the year and 
further  in  2023.  For  example,  since  1st  February  (the 
cut-off date of the Winter Forecast) there were notable 
increases  in  the  price  of  staple  and  internationally 
traded  agricultural  commodities  like  wheat  (+36%  by 
the  cut-off  date  of  this  forecast),  maize  (30%), 
soybean  (19%),  palm  oil  (37%),  rice  (9%)  and  sugar 
(15%). 

Economic outlook for EA and EU 

to  average  3.5%  in  2022.  In  the  EU,  in  2022, 
headline inflation is projected at 6.8% and core 
inflation at 4.2% 

In  2023,  headline  inflation  in  the  euro 
area is forecast to moderate substantially 
but  to  remain  elevated  at  2.7%.  This 
represents  an  upward  revision  of  0.8  pps. 
interim  Forecast, 
compared  to  the  Winter 
mostly on the  back of an  upward level  shift in 
energy  futures  and  a  more  persistent  pass-
through  to  domestic  prices.  The  expected 
stabilisation  of  energy  commodity  prices  will 
phase  out  base  effects  and  gradually  reduce 
the  contribution  to  the  headline  inflation  rate. 
Core  inflation  is  expected  to  remain  more 
elevated  and  persistent  throughout  most  of 
2023,  averaging  3.1%,  as  services  inflation  is 
set  to  be  supported  by  stronger  wage  growth. 
In the EU, headline inflation rate is forecast at 
3.2% and core inflation at 3.3%. 

This  projected 
inflation  profile  also 
reflects a pick-up in nominal wage growth. 
Growth in nominal compensation per employee 
in 2022, at 3.4% in the euro area (3.8% in the 
EU),  is  expected  to  be  robust  but  below 
headline  inflation.  In  2023,  it  is  expected  to 
remain  strong  at  3.2%  (3.7%),  i.e.  above 
real 
inflation,  marking  an 
compensation  growth  of  0.7%  (0.6%).  It  is 
nonetheless projected not to be strong enough 
to make up for the purchasing power losses of 
-2.2% (-2.3%) in 2022. 

increase 

in 

The expected increase in the GDP deflator 
reflects rising domestic price pressures. In 
2022, the projected growth in the GDP deflator 
is  still  substantially  below  the  HICP  inflation 
rate.  The  GDP  deflator  is  expected  to  remain 

41 

-20246810151617181920212223Graph I.2.28: Inflation breakdown, EUEnergy and unprocessed food (pps.)Other components (core inflation) (pps.)HICP, all itemsy-o-y %forecast 
                                                        
      
European Economic Forecast, Spring 2022 

contained  by  a  strong  increase  in  the  import 
price  deflator  mainly  driven  by  the  carry-over 
effect  of  the  increase  in  the  price  of  imported 
energy,   but  also  by  a  notable  deterioration  of 
the  euro’s  trade-weighted  nominal  effective 
exchange rate (NEER).  

expectations  over  the  next  12  months  remain 
at  elevated  levels  though  slightly  below  their 
highest  record.  This  is  to  be  expected  as  both 
firms’  and  households’  inflation  expectations 
are  typically  strongly  influenced  by  current 
inflation and their perceptions thereof. 

Market-based 
expectations 
inflation 
increased  significantly  at  the  shorter 
horizon. At the end of April, the 1-year forward 
1-year  (1y1y)  ahead  indicator  stood  at  2.7%, 
while the key longer-term (5y-5y) expectations 
stood at 2.4%, its highest level since 2012 but 
below the 2009 peak (see Graph I.2.29).  

2.6.  CURRENT ACCOUNT 

The  EU  merchandise  trade  balance  is 
expected  to  further  decline  in  2022  and 
rebound marginally in 2023. Sharp shifts in 
the  goods  trade  balance  reflect  large  price 
changes  of  commodities,  notably  energy,  that 
affect  import  deflators.  Following  a  dip  in 
2020,  energy  prices  rebounded  strongly  in  the 
second half of 2021 and continued their surge 
in the first months of 2022, fuelled by Russia’s 
invasion  of  Ukraine.  The 
resulting  EU 
merchandise  trade  balance  plummeted  from 
3.1% in 2020 to 2.3% in 2021 and a projected 
0.9% 
in 
commodity  prices  is  set  to  reverse  some  of 
the 
in  2023 
these 
merchandise  trade  balance  up  to  1.4%  (see 
Graph I.2.30).  

in  2022.  The  assumed  decline 

changes 

bringing 

profile 

inflation 
is 
The 
projected 
consistent  with 
the  views  held  by 
different  economic  agents.  The  mean 
market forecast for euro area inflation reported 
by Consensus Economics (April survey) stood at 
6.5%  for  2022  and  2.4%  for  2023.  The  ECB’s 
2022-Q2  Survey  of  Professional  Forecasters 
has  inflation  at  6.0%  in  2022,  but  expects  a 
slowdown  to  2.4%  in  2023  and  to  1.9%  in 
2024.  Meanwhile,  according  to  the  European 
Commission’s  business  and  consumer  surveys, 
firms’  selling  price  expectations  over  the  next 
12  months  reached  their  respective  highest 
in  April.  Consumer  price 
levels  on  record 

Global recovery in  tourism is set to boost 
the  EU’s  surplus  in  services  over  the 
forecast  horizon.  Parallel  to  the  recovery  in 
commodity  prices,  ongoing  improvements  in 
the 
the  epidemiological  situation  allowed 
European  tourism  industry  to  embark  on  a 
gradual  recovery.  A  strong  rebound  in  services 
export  growth  in  2021  is  expected  to  be 
followed  by  a  continued  recovery  in  2022  and 
2023.  Reflecting  this,  rising  exports  of  travel 
services  boosted  the  services  trade  balance, 
which  rose  from  the  historical  trough  of  0.7% 
of GDP in 2020 to 1.6% in 2021, and is set to 
improve further to 2.0% in 2022 and 2023 (see 
Graph I.2.30).  

42 

0.00.51.01.52.02.53.01213141516171819202122%Maturity dateGraph I.2.29: Inflation expectations derived from implied forward inflation-linked swap rates5 years forward 5 years ahead3 years forward 3 years ahead1 year forward 1 year aheadSSource: Bloomberg(Annual percentage change)20202021202220232021202220232020202120222023202120222023Private consumption deflator0.52.35.82.72.22.01.50.72.56.33.12.42.31.6GDP deflator1.62.03.93.11.61.91.51.92.34.43.41.92.11.7HICP0.32.66.12.72.42.21.40.72.96.83.22.62.51.6Compensation per employee0.74.03.43.42.62.92.40.94.13.83.72.93.32.8Unit labour costs4.40.02.32.1-0.40.21.04.60.02.52.2-0.30.41.2Import prices of goods-3.89.613.20.87.03.71.1-3.49.513.11.36.93.71.2Table I.2.5:Inflation outlook - euro area and EUEuro areaEUSpring 2022 forecastAutumn 2021 forecastSpring 2022 forecastAutumn 2021 forecast 
      
 
 
   
 
 
Economic outlook for EA and EU 

of  the  household  saving  rate.  This  is  only 
partially  offset  by  a  gradual  improvement  in 
public finances, on the back of the phasing-out 
of 
the  pandemic  support  measures.  The 
aggregate  investment  ratio  recovered  strongly 
in  2021  from  the  pandemic  low,  and  is 
expected  to  continue  inching  up  over  the 
forecast  horizon  in  line  with  the  developments 
in  general  government  and  corporations,  with 
households’  investment  ratios  set  to  remain 
broadly  unchanged.  In  terms  of  net  lending, 
households’  position  is  expected  to  continue 
declining in the forecast horizon from the 2020 
high of 6.2% of GDP to 1.8% projected in 2023, 
mirroring  the  gradual  decline  in  the  savings 
rate.  

Shifts  in  merchandise  trade  balances  in 
Member  States  are  driven  mostly  by  net 
imports  of  energy.  Changes  in  merchandise 
trade balances at a Member State level reflect 
the  importance  of  net  imports  of  energy 
commodities and the ensuing shifts in terms of 
trade. Merchandise trade balances deteriorated 
in all but four (Ireland, Cyprus, Luxembourg and 
the  Netherlands)  Member  States  in  2021,  and 
are projected to continue this trend in 2022 for 
all Member States.  The largest deterioration in 
the  goods  trade  balance  in  2022,  at  or  above 
3% of GDP, are expected for Latvia, Croatia and 
Hungary,  all  among  the  countries  most  highly 
exposed  to  energy  imports  (see  Graph  I.2.32). 
Reflecting  the  improvement  in  terms  of  trade, 
goods trade  balances are expected to increase 
in 2023 in the majority of Member States.  

The  EU  current  account  surplus  is  set  to 
decline sharply in 2022 before rebounding 
somewhat  in  2023.  Given  the  magnitude  of 
the  energy  price  shocks,  the  current  account 
surplus of the EU is set to move in tandem with 
the  changes  in  terms  of  goods  trade  over  the 
forecast  horizon,  even 
in 
services  surplus  is  expected  to  partially  offset 
this impact in 2022. Given the EU’s dependence 
on  commodity  imports,  its  current  account 
changes  have  often  been  shaped  by  shifts  in 
goods  terms  of  trade  (see  Graph  I.2.31).  The 
joint  deficit  of  primary  incomes  and  current 
transfers 
to  contribute  only 
marginally to changes in the current account in 
2022 and 2023.  

is  expected 

increase 

if  the 

The  decline  in  the  EU  current  account  is 
driven  by  the  post-pandemic  decline  in 
households’  net  lending.  The  developments 
in  the  EU  current  account  balance  mirror  the 
dynamics  of  the  economy-wide  saving  and 
investment.  The  EU  aggregate  savings  rate 
declined  in  2021  and  is  expected  to  continue 
falling in 2022 and 2023, reflecting the decline 

Increases  in services trade balance linked 
to  the  importance  of  tourism  in  Member 
States. Another trend shaping the dynamics of 
the  current  account  balance  at  a  country  level 

43 

-2-101234517181920212223Graph I.2.30: Current-account balance, EUNet primary income and current transfersBalance of servicesBalance of goodsCurrent account balance% of GDP2023202220212020201920182017201620152014201320122011201020092008200720062005200420032002200120001999199819971996-1.0-0.50.00.51.01.52.0-4-20246Year-on-year changes in the current account balance Changes in the goods terms of trade, %Graph I.2.31: Change in terms of  goods' trade vs. change in current account balance, EU, 1996-2023BEBGCZDKDEEEIEELESFRCYLVLTLUHUMTNLATPLPTROSISKFISEHR-4-3-2-10-5-4-3-2-10Change in goods balance 2022 vs.2021, in % of GDPTerms of goods' trade 2022Graph I.2.32: Change of terms of goods' trade in 2022 vs. change of goods' balance in 2022, Member States 
     
      
     
European Economic Forecast, Spring 2022 

are 
travel  services.  Member  States  with 
significant  exposure  to  tourism  have  seen  an 
upward  trend  in  services  balance  in  2021  that 
is  expected  to  continue  in  2022  and  in  2023 
(see  Graph  I.2.33).  Highest  increases  in  the 
services  surplus  between  2021  and  2023  are 
projected for Greece (by 4.1 pps.), Estonia(22) (by 
3.7  pps.),  Spain  (by  3.2  pps.)  and  Portugal  (by 
2.9 pps.). This trend is set to cushion the decline 
in  merchandise  trade  balance  in  2022  and 
reinforce  its  rise  in  2023  in  most  of  the 
Southern 
where 
international tourism plays an important role in 
the economy.  

European 

countries 

in 

Cross-country  differences 
current 
account changes reflect the importance of 
net energy imports and, to a lesser extent, 
tourism. Changes in terms of goods trade and 
the  ensuing  deterioration  in  the  energy  trade 
balance together with the importance of travel 
services  help  explain  most  of  the  shifts  in 
Member States’  current accounts. These forces 
are  jointly  expected  to  reduce  current  account 
balances  in  all  Member  States  but  Spain  and 
Estonia in 2022, with the largest decline in  the 
energy-imports-dominated 
and 
Latvia.  In  2023,  current  account  balances  are 
expected  to  rebound across  all  Member  States 
the 
(with 
Netherlands,  Czechia,  Denmark  and  Croatia), 
with Member States with large tourism sectors 

exception  of 

Lithuania, 

Lithuania 

the 

(22)  In  2022,  Estonia’s  balance  of  services  is  projected  to 
improve  significantly  (by  3.4  pp  of  GDP).  While  the 
recent  expansion  in  the  exports  of  services  is  set  to 
to  booming  output  of 
continue,  mainly 
information 
imports  of 
services  recorded  a  large  inflow  in  2021.  This  is 
expected  to  be  temporary  and  thus  exert  a  strong 
negative base effect on 2022. 

thanks 
technology  services, 

the 

44 

current 

pattern 

lower  balance 

leading  the  ranking  (e.g.  Greece).  With  the  V-
shaped 
account 
of 
developments,  most  Member  States  are  set  to 
see  a  somewhat 
in  2023 
compared  to  2021.  Current  account  balance  in 
Lithuania and Croatia is expected to decline the 
most  in  the  two  years  –  by  3-4  pps.  of  GDP, 
while  those  of  Estonia,  Greece  and  Spain  are 
projected to increase by some 1-3 pps. of GDP. 
Germany  and 
two 
countries  contributing  most  to  the  EU  current 
account  surplus  in  euro  terms (around  80%  of 
the  EU  surplus  in  2021),  are  projected  to  see 
their surpluses in 2023 decline with  respect to 
2021, as well as to the 2018-2020 average.  

the  Netherlands, 

the 

2.7.  PUBLIC FINANCES AND POLICY STANCE 

a 

revenue 
recovery  and  positive 
Fast 
significant 
drove 
developments 
reduction 
in  2021. 
in  public  deficits 
Starting from a historically high level of almost 
the  EU  general 
7%  of  GDP 
government  deficit  (Graph  I.2.34)  dropped  to 
4.7%  of  GDP 
in  2021.  The  working  of 
automatic stabilisers and rather strong revenue 
developments  (23)  explain  the  decrease,  despite 
the  extension  of  COVID-related  temporary 
measures where needed. 

in  2020, 

Public  deficits  are  forecast  to  continue 
2023, 
2022 
declining 

and 

in 

(23) 

In  2021,  revenue  windfalls  are  estimated  at  around 
¾%  of  GDP.  This  outcome  is  possibly  related  to  the 
strong  recovery  in  nominal  growth  of  consumption  of 
goods,  investment  and  imports,  components  that  are 
generally more tax-compliant than services. 

BEDEEEIEELESFRITCYLVLTLUMTNLATPTSISKFI-2-1012345-202468Change in services trade balance 2023vs.2021Travel services balance as % of GDP 2017-2021 averageGraph I.2.33: Importance of tourism vs. changes in the services trade balance, 2021-2023-9-8-7-6-5-4-3-2-10123ROHUMTBEPLESITCZEESIFRLVSKBGLTNLHRFIATPTDEELCYLUIESEDKEAEU% of GDPGraph I.2.34: Budget balance in Member States, 2021-20232023202220213% 
     
                                                        
        
                                                        
 
Economic outlook for EA and EU 

notwithstanding  the  costs  of  the  energy-
related  measures  and  humanitarian 
assistance. The aggregate  deficit in the EU is 
forecast  to  fall  to  3.6%  of  GDP  in  2022.  Most 
of  the  temporary  measures  taken  in  response 
to  the  COVID-19  crisis  are  expected  to  be 
phased  out(24)  and  the  economic  expansion 
implies an increase in the cyclical component of 
the  budget,  although  smaller  than  in  2021 
I.2.35).(25)  These  deficit-decreasing 
(Graph 
factors are set to override the additional costs 
of  measures  to  mitigate  the  impact  of  high 
energy prices (0.6% of GDP for the EU) and to 
deal  with  the  humanitarian  crisis  following 
Russia’s  invasion  of  Ukraine  (0.1  %  of  GDP). 
The  further drop  in  the  deficit  to  2.5%  of  GDP 
in  the  EU  in  2023  is  driven  by  the  complete 
phasing  out  of  the  temporary  COVID-related 
measures,  the  expected  unwinding  of  the 
energy-related  measures  and  a  still  increasing 
cyclical component. 

to 

taken 

Expenditure  developments  are  set  to  be 
the  main  factor  behind 
the  deficit 
reduction. In 2022 and 2023, the decrease in 
the  general  government  deficit  ratio  in  the  EU 
is  set  to  be  driven  by  the  change  in  the 
expenditure-to-GDP ratio (Graph I.2.36), mainly 
as a result of the expected  phasing out of the 
sizeable  emergency  measures 
in 
response 
the  COVID-19  crisis.  More 
specifically,  after  the  historically  high  level  of 
53%  recorded  in  2020,  and  a  first  fall  by 
around  1½  pps.  in  2021,  the  expenditure-to-
GDP  ratio  is  expected  to  continue  declining  in 
2022  (by  2  pps.)  and  in  2023  (1½  pps.).  The 
is  also  projected  to 
revenue-to-GDP  ratio 
decline in 2022 and 2023, by around 1¼ pps., 
reversing the increasing trend recorded in 2020 
and 2021. The composition of economic growth 
is 
tax-rich,  with 
to  become 
less 
towards  services  as 
consumption  shifting 
COVID-19  restrictions  are  lifted.  Expenditure 
and 
the 
implementation  of  the  national  Recovery  and 
Resilience Plans. 

revenue  projections 

incorporate 

set 

In  2020,  all  Member  States  except  Denmark 
and Sweden recorded deficits of more than 3% 
of  GDP.  The  number  of  Member  States  with  a 
deficit  greater  than  3%  of  GDP  fell  to  15  in 
2021.  It  is  projected  to  rise  to  17  in  2022 
before falling again to 11 in 2023, under a no 
policy  change  assumption.  The  11  countries 
are:    Belgium,  Czechia,  Estonia,  Spain,  France, 
Italy,  Hungary,  Malta,  Poland,  Romania  and 
Slovenia (Graph I.2.34). 

(24)  The impact of these measures on the deficit (mostly on 
the expenditure side) is projected to decline from 3½% 
of GDP in 2020 to 3¼% in 2021, ¾% in 2022 and nil 
in 2023. 

(25)  Given  the  high  uncertainty  surrounding  potential 
growth  estimates  at  this  juncture,  the  automatic 
stabilisers'  impact  is  subject  to  larger  revisions  than 
usual. 

Rising  public  investment  improves  the 
expenditure  composition.  The  EU  aggregate 
public  investment-to-GDP  ratio  is  projected  to 
increase  from  3%  of  GDP  in  2019  to  3.5%  in 
2023,  as  almost  all  Member  States  are 
expected  to  spend  more  on  public  investment 
than  they  did  before  the  pandemic  (Graph 
I.2.37).  Around  a  quarter  of  that  increase  is 
related  to  investment  financed  by  the  EU, 
especially  the  Recovery  and  Resilience  Facility, 
with  the  aim  to  support  a  sustainable  and 
the  green  and  digital 
inclusive 

recovery, 

45 

-6.5-5.5-4.5-3.5-2.5-1.5-0.50.51.52.52020202120222023Graph I.2.35: Drivers of the change in the government balance, EUDiscretionary policy and other factorsChange in interest expenditureChange in cyclical componentChange in budget balancepps. of GDPforecast4445464748495051525320192020202120222023Graph I.2.36: Expenditure and revenue developments, EUTotal expenditureTotal revenuesforecast%of GDP 
      
                                                        
   
European Economic Forecast, Spring 2022 

transitions  and  the  resilience  of  the  EU 
economy.(26)  

horizon,  while  higher  interest  rates  will  affect 
the implicit cost of debt only in the longer term. 
At the same time, the projected primary deficit 
continues  to  weigh  on  debt  developments, 
although  significantly  less  than  in  2020-2021 
(Graph I.2.38).  

The debt-to-GDP ratio is set to decline but 
stay  above  pre-COVID-19  crisis  level.  In 
2021,  the  aggregate  debt-to-GDP  ratio  of  the 
EU decreased to around 90% (97% in the euro 
area) from the historical peak of almost 92% in 
2020  (almost  100%  in  the  euro  area).  (27)  The 
aggregate  debt-to-GDP  ratio  of  the  EU  is 
forecast  to  continue  falling  to  around  87%  in 
2022 and 85% in 2023 (95% and 93% in the 
euro area, respectively), thanks to a favourable 
interest 
(‘snowball 
rate-growth  differential 
effect’(28)).  In  particular,  the  projected  increase 
in  the  GDP  deflator  is  set  to  have  a  sizeable 
the  forecast 
impact  over 
debt-decreasing 

The  EU  aggregate  debt  ratio  in  2023  is  set  to 
remain  above  the  pre-COVID-19  crisis  level  of 
79%  of  GDP  in  2019.  Half  of  the  Member 
States  are  set  to  record  debt  ratios  greater 
than  60%  of  GDP,  with  the  debt  ratios  of 
Belgium,  Greece,  Spain,  France, 
Italy,  and 
Portugal  expected  to  remain  above  100%  of 
GDP (Graph I.2.39). 

(26)  Differences 

in  EU  financed 

investment  between 
Member  States  depend  on  the  allocation  of  Recovery 
and  Resilience  Facility  grants  and  other  EU  funds,  as 
well as on the degree of absorption. 

(27)  Non-consolidated for intergovernmental loans. 
(28)  The  “snowball  effect”  captures  the  impact  of  interest 
expenditure  on  the  annual  accumulation  of  debt,  as 
well  as  the  impact  of  real  GDP  and  GDP  deflator 
growth on the debt ratio. 

46 

01234567IEESCYBEDELTATNLPTFRITDKPLMTLUFIELSESKCZBGHRLVHUROSIEEEUEAGraph I.2.37: Public investment in the EU, 2019 and 2023Nationally-financedRRFEU funds( excl. RRF)Nationally-financed in 2019% of GDP-6-4-20246810121420192020202120222023Graph I.2.38: Debt developments, EAPrimary balanceStock-flow adjustmentGDP deflator effectReal GDP growth effectInterest expenditureChange in the debt ratio(% of GDP)20202021202220232021202220232020202120222023202120222023Total receipts (1)46.547.346.646.346.145.545.546.246.946.045.745.845.245.1Total expenditure (2)53.652.450.348.853.249.447.953.051.649.648.252.448.847.4Actual balance (3) = (1)-(2)-7.1-5.1-3.7-2.5-7.1-3.9-2.4-6.8-4.7-3.6-2.5-6.6-3.6-2.3Interest expenditure (4)1.51.51.41.31.41.21.21.41.41.31.31.31.21.1Primary balance (5) = (3)+(4)-5.6-3.6-2.3-1.1-5.7-2.7-1.2-5.3-3.3-2.2-1.2-5.3-2.4-1.1Cyclically-adjusted budget balance (a)-3.7-4.0-3.4-2.6-5.7-3.9-2.8-3.6-3.6-3.2-2.5-5.2-3.5-2.6Cyclically-adjusted primary balance (a)-2.2-2.5-2.0-1.2-4.3-2.6-1.6-2.2-2.2-1.9-1.2-3.9-2.4-1.4Structural budget balance (a)-3.6-4.0-3.4-2.6-5.7-3.9-2.8-3.6-3.6-3.3-2.5-5.3-3.5-2.6Change in structural budget balance (a)-2.4-0.30.60.8-2.11.91.1-2.4-0.10.40.7-1.81.81.0Gross debt99.297.494.792.7100.097.997.091.789.787.185.292.190.089.1(a) as a % of potential output. The structural budget balance is the cyclically-adjusted budget balance net of one-off and other temporary measures estimated by the European Commission.Table I.2.6:General Government budgetary position - euro area and EUEuro areaEUSpring 2022 forecastAutumn 2021 forecastSpring 2022 forecastAutumn 2021 forecast 
 
        
                                                        
     
 
 
   
 
 
Economic outlook for EA and EU 

from 

come 

is  expected 

result,  nationally  financed  net  primary  current 
expenditure 
to  provide  an 
expansionary  contribution  to  the  fiscal  stance 
of  around  1¼%  of  GDP.  Other  positive 
contributions  would 
public 
investment  spending  financed  by  the  national 
budgets and spending financed by the RRF and 
other  EU  funds.  A  contractionary  fiscal  stance 
of  around  ½%  of  GDP  is  forecast  for  2023, 
mainly driven by the almost complete projected 
phasing out of measures to mitigate the impact 
of  the  high  energy  prices,  while  nationally 
financed  investment  and  expenditure  financed 
by  the  RRF  and  other  EU  funds  are  set  to 
provide  further  support 
to  a  sustainable 
recovery.  

fiscal 

stance, 

excluding 

Fiscal policy is set to remain supportive in 
2022  and  to  normalise  in  2023.  In  2021, 
the 
temporary 
emergency  measures  related  to  the  COVID-19 
including  support  from  the  EU 
crisis  but 
budget,(29) 
to  have  been 
is  estimated 
expansionary,  by  around  1%  of  GDP  (Graph 
I.2.40). In 2022, the fiscal stance is projected to 
be  even  more  supportive,  by  around  1¾%  of 
GDP,  as  governments  have  adopted  new 
measures to help households and firms to cope 
with  the  surge  in  energy  prices  -  such  as 
changes  in  indirect  taxes,  subsidies  on  energy 
products or  production,  or  price  caps in  energy 
markets  -  and  are  offering  humanitarian 
assistance to people fleeing Ukraine. As a  

(29)  The  assessment  of  the  euro  area  fiscal  stance  takes 
into account the unprecedented fiscal support provided 
at  EU  level  through  Next  Generation  EU  (NGEU)  and 
especially  its  Recovery  and  Resilience  Facility  (RRF). 
Expenditure financed by RRF grants does not, however, 
show  up  in  the  conventional  indicators  of  fiscal 
surveillance.  In  other  words,  in  the  presence  of  NGEU, 
the  business-as-usual  indicator  of  the  fiscal  stance 
underestimates 
to 
fiscal 
aggregate demand. In order to present the full picture, 
the  fiscal  stance  measures  need  to  include  support 
from the EU budget. 

impulse  provided 

the 

47 

0306090120150180210EELUBGSEDKLTCZIELVPLNLROSKMTDEFISIHRHUATCYBEFRESPTITELEUEA% of GDPGraph I.2.39: General government debt developments202360%90%2019-0.6-0.4-0.20.00.20.40.60.81.01.21.41.61.82.02020202120222023Graph I.2.40: Fiscal stance in the EU and the euro areaExpenditure financed by RRF grants and EU fundsOther capital expenditureNationally financed  primary current expenditureNationally financed investmentFiscal stanceContractionary/ ConsolidationExpansionary/Relaxation% of GDPNote: Corrected for emergency temporary measures  
        
                                                        
        
3.  RISKS 

Forecast 

The  balance  of  risks  surrounding  the 
forecast 
is  skewed  towards  adverse 
outcomes. The unprecedented nature and size 
of the  shocks  ushered in by  the  war make the 
baseline  projections  presented  in  the  Spring 
2022 
considerable 
subject 
uncertainty.  The  realisation  of  the  key  working 
assumptions  underpinning  them  –  regarding 
the  evolution  of  the  geopolitical  situation  and 
some  of  its  reverberations  in  e.g.  commodity 
markets and trade (see Box I.1.1) – is subject to 
high  risks.  On  balance,  these  risks  are  skewed 
to the downside.  

to 

from 

reverberating 

Shocks 
an 
unpredictable evolution of energy markets 
also  dominate  the  balance  of  risks.  This 
consideration  motivates 
the  model-based 
scenario  analysis  that  is  presented  in  Chapter 
4,  focusing  on  the  impact  of  higher  energy 
commodity prices and of an outright cut in gas 
supply  from  Russia.  In  both  scenarios,  GDP 
growth  rates  would  be  lower  and  inflation 
higher than in the baseline. In the more severe 
scenario, economic output would contract on a 
quarterly  basis 
if 
commodity  prices  remain  high  for  longer  or 
increase  further,  price-wage  feedback  loops 
could  arise.  Risks  of  ripple  effects  to  other 
markets,  like  energy-intensive  manufacturing 
and agriculture, would also increase. Especially 
in  food  and  energy  importing  poorer  countries 
outside  the  EU,  high  commodity  prices  pose 
risks to economic and social stability.   

in  2022.  Furthermore, 

A stronger deterioration of terms of trade 
could strengthen the stagflationary forces 
unleashed  by  the  war.  Further  increases  of 
import prices would feed into higher production 
costs  and  consumer  prices,  in  turn  curtailing 
investment  and  household  consumption  to  a 
larger extent than projected. In addition, if cost 
pressures  are  passed  on  from  producers  to 
consumers  at  a  larger  extent  than  projected 
and/or  wage  pressures  increase,  the  initial 
terms  of  trade  shock  would  be  amplified, 
leading 
lower 
employment and higher inflation.  

to  greater  output 

loss, 

Strong  inflationary  pressures  also  come 
financing 
with 

increased 

risks 

to 

than 

financial 

conditions 

conditions.  Higher  inflation  could  lead  to 
tighter 
those 
underpinning the forecast. Higher interest rates 
and  slowing  demand  would  strain  public 
budgets  and  could  trigger  a  correction  in  the 
valuation  of  financial  and  non-financial  (e.g. 
housing) assets, burden the banking sector and 
the  availability  of  credit.  Similar 
reduce 
dynamics  would  also  apply  outside  of  the  EU, 
as  many  advanced  and  emerging  economies 
struggle  with  unprecedented 
inflationary 
pressures.  Moreover,  a  further  rise  in  the  US 
dollar  and  higher 
financing  costs  would 
increase pressure on EMEs exchange rates and 
financing  conditions,  notably  among  heavily 
indebted  ones  with  large  foreign  currency 
exposure,  with  negative  consequences  for 
external demand. If uncontained, the unwinding 
debt  crisis  in  China’s  real  estate  sector  may 
have  negative  spillovers  to  the  rest  of  the 
world, while monetary tightening in the US risks 
producing  a  much  sharper  deceleration  than 
currently projected.  This would in turn result in 
reduced demand for European exports.  

policy 

The  COVID-19  pandemic 
remains  a 
significant  risk  factor.  A  resurgence  of 
COVID-19 infections in Europe cannot  be  ruled 
out, and could cause new disruptions in the EU 
economy  .  Outside  the  EU,  this  risk  is  even 
greater,  as  vaccination  rates  in  many  regions 
remain  low.  Moreover,  China’s  “dynamic  zero-
infections 
and 
COVID-19” 
elsewhere in the Asia-Pacific region continue to 
pose the risk of localised lockdowns, as indeed 
is  already  happening  in  Shanghai.  This  could 
disrupt production as well as the functioning of 
critical 
logistics  and 
transports) more than assumed in the baseline, 
resulting 
lower-than-expected  economic 
activity in China and additional disturbances in 
global trade and inflationary pressures. 

infrastructure 

rising 

(e.g. 

in 

Some  of  the  aforementioned  downside 
risks  could  also  turn  into  the  opposite 
direction. Domestic demand could prove more 
resilient to increasing prices if households were 
to  use  more  of  their  savings  for  consumption. 
Furthermore,  investments  fostered  by  the  RRF 
could  generate  a  stronger  impulse  to  activity 
through  e.g.  stronger  cross-sector  and  cross-
country  spillovers.  Ongoing  structural  shifts 

49 

  
European Economic Forecast, Spring 2022 

favouring the  digital transformation could lead 
to 
faster  productivity  gains.  Finally,  an 
accelerated reduction of fossil fuel dependency  

and  greater  investment  in  energy  saving  and 
renewable  energy  could  reduce  the  negative 
impact  of  high  energy  prices  faster  than 
assumed. 

50 

 
4.  SPECIAL ISSUE: ALTERNATIVE SCENARIOS ON THE 

ECONOMIC OUTLOOK 

High  uncertainty  around  the  baseline 
forecast  warrants  a  scenario  analysis.  In 
the  context  of  a  complex  and  fast-changing 
geopolitical  and  economic  environment,  this 
Special  Topic  assesses  the  potential  impact  of 
the  realisation  of  key  risks  to  the  baseline 
forecast  presented  in  this  publication.  The 
analysis  proceeds  in  two  steps.  First,  through 
the 
lens  of  an  estimated  macroeconomic 
model,  it  identifies  the  driving  forces  shaping 
past  and  projected  output  and  price  dynamics. 
Then  this  identification 
is  used  to  define 
alternative  scenarios  in  terms  of  the  potential 
evolution  of  energy  prices  and  supplies,  trade, 
uncertainty, and consumer confidence.  

The  model  captures  key  elements  of  the 
current  macroeconomic  environment.  The 
assessment builds on the Commission’s Global 
(GM) (30),  which 
Multi-Country 
features  a 
prominent  role  for  energy  commodities (31)  in 
production  and  consumption  and  has  been 
augmented  to  take  account  of  the  pandemic’s 
economic  implications.(32)  The  model  estimates 
use  a  rich  data  set  of  over  30  different  time 

(30)  The 

(GM)  model, 

Global  Multi-Country 

a 
macroeconomic model in the New Keynesian tradition, 
has  been  developed  by  DG  ECFIN  and  the  Joint 
Research  Centre  of  the  European  Commission.  The 
analysis considers  a  two-region  configuration with the 
euro  area  and  the  rest  of  the  world.  For  a  detailed 
description of the GM model, see Albonico, A., L. Calès, 
R.  Cardani,  O.  Croitorov,  F.  Di  Dio,  F.  Ferroni,  M. 
Giovannini,  S.  Hohberger,  B.  Pataracchia,  F.  Pericoli,  P. 
Pfeiffer, R. Raciborski, M. Ratto, W. Roeger and L. Vogel 
(2019).  ‘The  Global  Multi-Country  Model  (GM):  an 
Estimated  DSGE  Model  for  the  Euro  Area  Countries’. 
ECFIN  Discussion 
European 
Commission.  
(31)  The  model 

Paper  No.  102. 

includes  energy  as  an 

imported 
intermediate input with limited substitutability, subject 
increase 
to  excise  duties.  Higher  energy  prices 
production costs, which firms (partially) pass on to final 
consumers.  It  also  features  a  direct  pass-through  into 
consumer prices. In addition, the model links the firms’ 
gross  operating  surplus  to  investment  via  liquidity 
constraints.  This  channel  also  implies  that  higher 
energy prices negatively impact business investment. 

in 

total, 

series 
including,  among  others, 
historical  and  forecast  data  from  national 
accounts,  trade  data,  as  well  as  market-based 
expectations  of  gas  and  oil  prices  based  on 
futures  markets,  in  line  with  the  assumptions 
included in the baseline forecast (see Box I.5.1). 

Decomposition of the baseline forecast 

the 

deflator) 

consumption 

The model estimates confirm the key role 
of  soaring  energy  prices 
in  fuelling 
inflation.  Graphs  I.4.1  breaks  down  inflation 
(as measured by the annual growth rate of the 
its  
into 
private 
estimated  main  drivers.(33)(34)  Given 
the 
important  weight  of  energy  products  in  the 
consumption  basket, 
transmission  of 
energy price shocks to the private consumption 
is  strong,  fast  and  amplified  by 
deflator 
second-round  effects  stemming  from  higher 
production  costs  and  wages.  Some  of  these 
inflationary  effects  persist  in  2023.  Besides 
energy  prices,  substantial  supply-side  shocks 
also  increase  consumer  prices,  while  lowering 
economic  activity.  Overall,  based  on 
the 
forecast  baseline,  these  factors  contribute 
around  3  pps.  to  inflation  this  year  and  more 
than 1 pp. in 2023 (see Graph I.4.1).  

(33) 

their 

trend. 

‘Shocks’  drive  the  deviation  of  the  endogenous  model 
long-run 
variables 
The 
from 
(1)  prices  of  energy 
decompositions  distinguish: 
commodities  and  domestic  supply 
(productivity) 
disruptions; (2) labour and goods market adjustment as 
captured  by  wage  and  price  mark-up  shocks;  (3) 
domestic  demand  shocks,  including  pandemic-specific 
lockdown  shocks  and  discretionary  fiscal  policy;  (4) 
shocks to world demand and international trade.  
(34)  In  Graphs  I.4.1  and  I.4.2,  stacked  coloured  bars 
represent  contributions  of  groups  of  shocks 
to 
deviations  of  growth  and  inflation  from  long-term 
trends,  indicated  by  dashed  bold  horizontal  lines  in 
both  panels.  Bars  above  (below)  this  line  indicate 
positive (negative) contributions. 

(32)  I.e; 

temporary  `lockdown’  shocks  and 

financial 
constraints  on  business 
investment.  See  also  R. 
Cardani,  O.  Croitorov,  F.  M.  Giovannini,  P.  Pfeiffer,  M. 
Ratto, and L. Vogel (2021).  ‘The Euro Area’s Pandemic 
Interpretation'.  ECFIN 
Recession:  A  DSGE-Based 
Discussion Paper No. 153. European Commission. 

51 

  
                                                        
                                                        
European Economic Forecast, Spring 2022 

They 

spending. 

Sharp  increases  in  commodity  prices  also 
erode  disposable  incomes  and  weigh  on 
consumer 
additionally 
depress  business  investment  and  worsen  the 
trade  balance through negative terms of trade 
the  model 
effects.  Overall,  according 
estimates,  higher  energy  prices  reduce  GDP 
growth  by  around  2  pps.  in  2022.  The  impact 
on  growth  in  2023  is  negligible  (see  Graph 
I.4.2).   

to 

gradual and supports GDP growth this year and 
slightly less in 2023.(35) 

Pent-up  demand  and  the  easing  of 
restrictions  for  contact-intensive  services 
push inflation up. By contrast, the pre-COVID 
trend  of  persistently  high    savings (36)  and 
slowdown 
demand  weigh 
domestic 
negatively on the forecast for inflation. 

in 

World demand and international trade are 
a  drag  on  growth  this  year.  The  negative 
contribution  of  foreign  factors 
is  mostly 
explained by a slowdown in trade growth, some 
market  share  losses,  and  export  price  hikes  in 
the  rest  of  the  world  (possibly  reflecting, 
amongst others, supply-chain bottlenecks). The 
impact of the latter on euro area inflation also 
increases, notably this year.  

Risk scenarios 

the 

I.4.1 

consumer 

summarises 

Two  alternative  scenarios  shed  light  on 
the  impact  of  the  realisation  of  key 
downside  risks  to  the  baseline  forecast. 
Table 
scenarios’ 
specifications  through  several  key  channels 
related to energy  commodities, trade, business 
financing 
and 
conditions.  The  scenarios  do  not 
include 
economic  policy  responses  to  the  shocks 
beyond  the  workings  of  automatic  stabilisers 
and the monetary policy reaction. For the latter, 
the  modelling  allows  for  an  (endogenous)  exit 
from the effective lower bound. The shocks are 
assumed  to  materialise  in  the  second  quarter 
of 2022 and to play out with some persistence. 

sentiment,  and 

Domestic  demand 
remains  the  main 
engine  of  growth.  Despite  downward 
revisions to private consumption and corporate 
investment,  domestic  demand  continues  to 
support growth in 2022 and 2023, even though 
with  fading  momentum.  With  the  reopening  of 
economies 
improved 
in  early  2021  and 
economic  sentiment,  the  reduction  of  ‘forced’ 
savings  accumulated  in  2020  supported  the 
economic  rebound,  but  this  growth  impulse  is 
expected  to  fade  this  year.  By  contrast,  the 
reduction  in  ‘precautionary’  saving  is  more 

52 

A  first,  adverse  scenario 
is  mainly 
characterised  by  oil  and  gas  prices  25% 
above  the  baseline  assumptions  over  the 
forecast  horizon.  The  size  of  the  price  shock 
is  motivated  by  the  price  volatility  observed 
The 
between 
stagflationary  forces  triggered  by  this  price 

and  March. 

February 

(35)  For  a  detailed analysis  on  the role of  demand  shocks, 
see  European  Commission  (2021a),  `The  role  of 
savings in determining the recovery path', in European 
Economic  Forecast:  Spring  2021,  Special  Issue  4.1’. 
Institutional Paper 149, pp. 45-48. 

(36)  On  pre-COVID  factors  through  the  lens  of  the  GM 
model, see, for example, European Commission (2018), 
`Drivers of the euro area recovery - evidence from an 
estimated  model’  in  European  Economic  Forecast: 
Spring 2018, Box 1.3’. Institutional Paper 77, pp. 64-67. 

-2%0%2%4%6%8%20192020202120222023Graph I.4.1: Euro area private consumption deflator growth, deviations from trendEnergy and supplyLabour and goods marketsDomestic demandExternal environmentOthersInflation (data)forecast-8%-6%-4%-2%0%2%4%6%8%20192020202120222023Graph I.4.2: Euro area real GDP growth, deviations from trendEnergy and supplyLabour and goods marketsDomestic demandExternal environmentOthersGDP growth (data)forecast 
     
     
 
                                                        
 
increase are assumed to curtail global demand, 
as  expressed  by  a  relative  decline  in  rest-of-
the-world  GDP  by  1%,  and  exacerbate  supply 
chain  bottlenecks  for  non-energy  goods  and 
services,  as  captured  by  a  stylised  shock  to 
rest-of-the-world  export  prices.  In  addition, 
higher  risk  premia  raise  financing  costs  for 
firms,  weighing  on  investment.  For  consumers, 
adverse  confidence  effects  further  weigh  on 
private consumption.   

A  severe  scenario  considers  large-scale 
disruptions  to  natural  gas  imports  from 
Russia. (37)  Compared  to  the  adverse  scenario, 
the  energy  supply  disruptions  are  assumed  to 
be  associated  with  further  increases  in  risk 
premia and negative confidence effects. 

increase 

The  severe  scenario  reflects  the  limited 
substitution  possibilities  in  the  short  run. 
Gas  imports  are  special  because  their  delivery 
depends very much on specific infrastructure – 
pipelines  and  LNG  terminals  –  and  other 
their 
producer  countries  cannot 
deliveries  fast  enough  to  compensate  fully  for 
a stop of imports from Russia. As a result, the 
short-run adjustment to such a large shock can 
be  extremely  costly.  It  is  also  qualitatively 
different from adjustments to commodity price 
fluctuations  like  the  one  assumed  in  the 
adverse scenario. The  model captures the  high 
costs  for  short-run  adjustment  by  assuming  a 
very low elasticity of  substitution  between  gas 
and other production inputs. (38)  

(37)  A growing body of analyses has estimated the effects 
of  a  sudden  stop  of  gas  supply  on  European 
economies.  For  a  seminal  study  on  Germany,  see 
Bachmann R.,  D.  Baqaee, C.  Bayer, M.  Kuhn,  B.  Moll,  A. 
Peichl, K. Pittel and M. Schularick (2022): `What if? The 
Economic  Effects  for  Germany  of  a  Stop  of  Energy 
Imports  from  Russia’,  ECONtribute  Policy  Brief,  no 
28/2022. For a survey (and further estimates), see also 
Berger,  E.,  S.  Bialek,  N.  Garnadt,  V.  Grimm,  L.  Other,  L. 
Salzmann,  M.  Schnitzer,  A.  Truger,  and  V.  Wieland 
(2022),  ‘A  potential  sudden  stop  of  energy  imports 
from  Russia:  Effects  on  energy  security  and  economic 
output  in  Germany  and  the  EU’,  German  Council  of 
Economic Experts. Working Paper 01/2022. 

(38)  The  model  distinguishes  household  and  business 
demand for natural gas. The severe scenario calibrates 
the parameters governing the elasticities between gas 
and other inputs to 0.08 (households) and 0.12 (firms). 
Due  to  frictions  and  monopolistic  competition  in  the 
model,  the  very  short-run  substitution  is  even  more 
limited.  Technically,  a  price  shock  triggers  a  reduction 
in  gas volume  by up  to  -40%,  coupled  with  prolonged 
difficulties  in  accessing  alternatives  (50%  of  the 

Economic outlook for EA and EU 

in 

In  the  adverse  scenario,  the  increase  in 
energy  prices  strengthens  stagflationary 
forces. Annual GDP growth rates for 2022 and 
2023 are estimated to be 1¼ and ½ pps. below 
the  projections 
the  baseline  forecast, 
respectively.  Inflation  is  estimated  to  stand  ¾ 
and ½ pps. above the forecast baseline in 2022 
and  2023,  respectively  (see  Graphs  I.4.3  and 
I.4.4).  The  growth  slowdown  in  the  rest  of  the 
world  translates  into  a  reduction  in  euro  area 
exports  by  a  similar  magnitude,  while  supply 
chain  disruptions  and  higher  rest-of-the-world 
export prices further depress economic activity. 
Each  of  the  two  factors  shaves  off  around  ½ 
pps. of GDP growth in 2022. Higher gas and oil 
prices  are  also  the  main  drivers  behind  the 
impact on inflation (around +¾ pps. each year). 
However,  the  mix  of  foreign  demand  and 
supply  shocks,  i.e.  reduced  external  demand 
intensified  supply  chain  bottlenecks, 
and 
implies  a  relatively  neutral  impact  on  inflation 
since 
pressures 
compensate.    Finally,  confidence  effects  and 
financial  markets  risk  premia  further  reduce 
household  consumption,  business  investment 
and real GDP, while mildly reducing inflationary 
pressures in 2023. 

downside 

upside 

and 

a 

A  sharp  reduction  in  gas  supplies  from 
Russia  would 
substantial 
imply 
deterioration  of  the  economic  outlook.  In 
the severe scenario, and under the assumption 
of limited substitution, the lack of gas supplies 
by  Russia,  coupled  with  the  assumed  oil  price 
increase,  reduces  GDP  growth  by  an  additional 
1½ pps. in 2022 and by around ¾ pps. in 2023, 

volume  decline  remains  after  2½  years).  These 
in  the  sense  that 
assumptions  are  conservative 
substitution  on  world  markets  could  be  faster  or  has 
already occurred to some extent. 

53 

0.00.51.01.52.02.53.020222023Graph I.4.3: Real GDP growth rates across scenarios, euro areaBaselineAdverseSevere% 
                                                        
 
   
                                                                            
European Economic Forecast, Spring 2022 

compared  to  the  forecast  baseline.  Taking  all 
channels  together,  the  severe  scenario  implies 
GDP  growth  rates  of  around  2½  and  1  pps. 
below the forecast baseline in 2022 and 2023, 
respectively.  Inflation  is  substantially  higher  in 
2022  and  2023  relative  to  the  baseline 
scenario: 3 pps. in 2022 and more than 1 pp. in 
2023 
projection. 
Consequently,  this  year’s  inflation  rate  would 
be just above 9%, as shown in Graphs I.4.5 and 
I.4.6.  

baseline 

above 

the 

In both scenarios, euro area GDP contracts 
on  a  quarterly  basis  in  2022.  The  output 
reduction  implied  by  the  adverse  and  severe 
scenarios  thus  implies  negative  quarter-on-
quarter  growth  on  average  in  the  last  three 
quarters of 2022.  

54 

analysis 

scenario 

This 
usefully 
complements  the  forecast  narrative,  but 
important  limitations  remain.  Like  other 
model-based  assessments,  these  simulations 
are subject to an unusual degree of uncertainty 

01234567891020222023Graph I.4.4: Inflation rates across scenarios, euro areaBaselineAdverseSevere%-3.0-2.5-2.0-1.5-1.0-0.50.00.522232223Graph I.4.5: Drivers of real GDP growthEnergy commoditiesExternal environmentUncertainty and confidenceGas supplySeverepps deviation from baselineAdverse-1.0-0.50.00.51.01.52.02.53.03.522232223Graph I.4.6: Drivers of inflationEnergy commoditiesExternal environmentUncertainty and confidenceGas supplySeverepps deviation from baselineAdverseTable I.4.1:Specification of alternative scenariosChannelAdverseSevereEnergy commoditiesSudden stop of gas supply from Russia: with only partial substitution possibilitiesOil prices as in the adverse scenarioExternal environmentGlobal activity and trade exposure: Lower exports to Russia and broader weakening of foreign demandRest-of-the-world GDP falls by an additional 1% (broadly in line with IMF World Economic Outlook risk scenario)Same as adverse scenarioSupply chains and logisticsPersistently higher rest-of-the-world export prices decrease euro area imports by 1%, reflecting further economic fragmentationSame as adverseUncertainty and confidenceConfidence: negative shock to households’ spendingA 1 std. deviation (persistent) shock affecting households’ intertemporal consumption decisions (based on the estimated historical shock series, implying a reduction in private consumption growth by around 0.3-0.4 pps. each year)Twice as large as in the adverse scenario (2 std. deviation shock)Risk premia: Cost of funding for firms up due to less favourable outlookPersistent increase in risk premium (by 50 bps)Persistent increase in risk premium (by 100 bps)Other assumptionsPolicyNo additional policy response besides automatic stabilisers, monetary policy’s interest rate ruleSame as adverseScenarioOil and gas pricesAn increase by 25% compared to the baseline assumption this year and next 
   
 
   
 
   
 
 
  
 
 
Economic outlook for EA and EU 

it  was  designed. 

at  this  juncture.  This  caveat  is  especially  true 
for  the  severe  scenario,  which,  by  sketching 
unprecedented  extreme  shocks,  pushes  the 
macroeconomic  model  beyond  the  ground  for 
which 
In  particular,  the 
macroeconomic  effects  greatly  depend  on 
assumed  and  highly  uncertain  substitution 
possibilities,  as  well  as  on  the  timing  and 
persistence  of  the  disruption.  Beyond  the  risks 
explicitly addressed in the stylised simulations, 
additional disruptions could come from non- 

chain  bottlenecks.  Moreover, 

energy  imports  such  as  metals,  fertilisers  and 
food  imports,  as  well  as  from  more  extreme 
the 
supply 
scenarios are run for the euro area as a whole, 
whereas  European  countries  are  set  to  be 
affected 
key 
determinant  is  the  different  dependence  on 
energy  commodities  and  Russian  gas.  Finally, 
all  simulations  assume  that  the  scenarios’ 
additional  shocks  hit  the  economy  in  the 
second  quarter  of  this  year  and  will  gradually 
fade over time.  

to  different 

degrees.  A 

55 

 
 
5.  BOXES 

(Continued on the next page) 

57 

Box I.5.1: Some technical elements behind the forecastThe cut-off date for taking information into account in this European Economic Forecast was 29 April 2022. Ad-hoc assumptions underpinning this forecast, relating to, e.g. the geo-political situation, are detailed in Box I.1.1. Exchange and interest rates The forecast builds on the technical assumption of fixed nominal exchange rates for all currencies (see Table 1 and Table 31 in the Statistical Annex). Assumptions for interest rates are market-based. Short-term interest rates for the euro area are derived from futures contracts. Long-term interest rates for the euro area, as well as short- and long-term interest rates for other Member States, are calculated using implicit forward swap rates, corrected for the current spread between the interest rate and swap rate. In cases where no market instrument is available, the fixed spread vis-à-vis the euro area interest rate is taken for both short- and long-term rates.  Commodity prices Assumptions for Brent oil, gas and electricity prices are based on futures markets, using the average over the 10-day reference period between 14 and 27 April.  Trade policies and assumptions Also for trade policy, this forecast pencils in only the measures that have been implemented until the cut-off date, as detailed in Box I.1.1. includes bans on specific exports and imports (see https://ec.europa.eu/info/strategy/priorities-2019-2024). ESA 2010 The forecast is based on the ESA 2010 system of national accounts for all Member States, the EU and the euro area aggregates.  Calendar effects on GDP growth and output gaps The number of working days may differ from one year to another. The Commission’s annual GDP forecasts are not adjusted for the number of working days, but quarterly forecasts are.  The working-day effect in the EU is estimated to be limited in  2022 and 2023, implying that adjusted and unadjusted annual growth rates differ only marginally (by up to ±0.1 pps.), but it may be significant in the case of some Member States. For the euro, area it is estimated to be +0.2 in 2022 and marginal in 2023.  Estimations of potential GDP and output gaps are not adjusted for working days. Furthermore, since the working-day effect is considered temporary, it is not expected to affect cyclically-adjusted balances.  The inclusion of the Recovery and Resilience Facility in the forecast The macroeconomic and budgetary projections in the forecast include the impact of the implementation of the Recovery and Resilience Facility (RRF). Unless mentioned otherwise, the        Table 1:Technical assumptions202120222023202220233-month EURIBOR (percentage per annum)-0.5-0.11.3-0.5-0.310-year government bond yields (percentage per annum) (a)-0.40.81.1-0.10.1USD/EUR exchange rate1.181.091.081.161.16GBP/EUR exchange rate0.860.840.830.850.85RMB/EUR exchange rate7.637.006.977.467.46JPY/EUR exchange rate129.9135.61137.38130.54130.54EUR nominal effective exchange rate (annual percentage change) (b)1.30-2.20-0.50-1.300.00Natural gas (EUR/Mwh) (c)   47.197.8380.3649.4930.61Electricity (EUR/Mwh) (d)107.23234.31210.54130.7284.39Oil price (USD per barrel)70.7103.693.578.972.3Oil price (EUR per barrel)59.895.086.668.162.5(a) 10-year government bond yields for the euro area are the German government bond yields.(b) 42 industrial countries EU-27, TR CH NR US UK CA JP AU MX NZ KO CN HK RU BR. (c) ICE Dutch TTF. (d) GDP - weighted average of electricity prices in DE, FR, IT, ES, NL, BE, AT.Autumn 2021forecastSpring 2022forecast 
 
 
        
 
European Economic Forecast, Spring 2022 

Box (continued) 

58 

forecast includes the measures incorporated in the Recovery and Resilience Plans as submitted to the Commission. The cash disbursement and expenditure profiles implicit in the forecast are consistent with the time profile of milestones and targets as specified in the Plans (and - if adopted - the relevant Council Implementing Decisions). In all cases where the RRP was not yet endorsed by a Council Implementing Decision, the incorporation of the RRP in the forecast rests on the working assumption of a positive assessment by the Commission and future endorsement by a Council Implementing Decision. The working assumptions in the forecast do not pre-judge the outcomes of future Commission and Council decisions, nor the update of maximum financial contribution by 30 June 2022 per Article 11(2) of the RRF Regulation.  Transactions related to the RRF in the forecast are recorded in line with Eurostat’s ‘Guidance note on the statistical recording of the Recovery and Resilience Facility’ of 7 October 2021. In particular, this implies that, except for 2020, the budgetary impact any expenditure or other costs financed with non-repayable  financial support (‘grants’) from the RRF is neutralised in revenue projections by matching transfers received from the EU (in 2020, expenditure and other costs retroactively financed by RRF grants are offset by transfers from the EU in the year of adoption of the Council Implementing Decision). Expenditures financed by loans from the RRF are not neutralised and thus affect the government’s balance, while the actual loans by the RRF are recorded as Member States’ debt towards the EU. Budgetary data and forecasts The forecast incorporates validated public finance data up to 2021 as published in Eurostat’s news release 46/2022 of 22 April 2022. The public finance forecast is made under the ‘no-policy-change’ assumption, which extrapolates past revenue and expenditure trends and relationships in line with past policy orientations. This may also include the adoption of working assumptions, in particular to deal with structural breaks. The no-policy-change forecast includes all fiscal policy measures that imply a change to past policy orientations on the condition that they are sufficiently detailed as well as adopted or at least credibly announced. For 2022 in particular, the annual budgets adopted or presented to national parliaments are taken into consideration. The temporary emergency measures taken in response to COVID-19 crisis adopted in 2020 and 2021 are not treated as one-off and are thus reflected in the estimation of the structural budget balanceIn line with Eurostat’s press release, EU and euro area aggregates for general government balance and debt are based exclusively on the Member States’ balances and debt. For debt, whereas Eurostat publishes the consolidated figures (corrected for intergovernmental loans, including those made through the European Financial Stability Facility), the projections in the forecast years 2022 and 2023 are published on a non-consolidated basis. To ensure consistency in the time series, historical data are also published on the same basis. For 2021, this implies an aggregate debt-to-GDP ratio that is somewhat higher than the consolidated general government debt ratio published by Eurostat in its news release 46/2022 of 22 April 2022 (by 1.8 pps. in the EA and by 1.6 pps. in the EU).   
 
        
 
 
PART II 
Prospects by individual economy 

 
 
Euro Area Member States 

 
 
 
1.  BELGIUM 

Economic growth in Belgium is expected to slow down to 2.0% in 2022 and 1.8% in 2023 after 
the  strong  rebound  in  2021.  The  easing  of  restrictions  related  to  COVID-19  combined  with  the 
depressing  effect  of  high  inflation,  which  is  forecast  to  reach  7.8%  in  2022  on  the  back  of 
skyrocketing  energy  prices,  is  projected  to  lead  to  moderate  growth  of  private  consumption. 
Uncertainty, high costs and supply side constraints are expected to weigh on investment. Despite 
the  withdrawal  of  COVID-19  measures,  the  government  deficit  is  set  to  decrease  to  a  limited 
extent, to 4.4% of GDP in 2023. 

After a broad-based recovery in 2021, a slow 
down in 2022 

Economic  growth  is  set  to  slow  down  in  2022 
after  the  rebound  of  6.2%  in  2021,  when  the 
gradual  lifting  of  restrictions  ushered  in  a 
robust  recovery.  Moving  forward,  a  gradual 
is 
return  of  growth  towards 
expected.  

its  potential 

positive  but 
consumption. 

limited  effect  on  private 

After  a  strong  rebound  during  the  first  part  of 
2021,  investment  decreased  strongly  in  the 
second  half  of  the  year.  In  2022,  uncertainty, 
higher  cost  pressures  from  input  prices  and 
wages  as  well  as  supply  side  constraints  are 
expected  to  weigh  on  business  investment.  At 
the  same  time,  the  RRF  and  the  energy 
transition  are  forecast  to  support  gross  fixed 
capital  formation.  After  a  strong  performance 
of  net  exports  in  2021,  a  less  favourable 
external  environment,  notably  for  world  trade, 
is forecast to weigh on imports and exports this 
year.  The  contribution  of  net  exports  to  GDP 
growth  is  projected  to  be  slightly  negative  in 
both 2022 and 2023. 

Improvements in the labour market  

Real  GDP  growth  is  forecast  to  reach  2.0%  in 
2022 and 1.8% in 2023. The wave of Omicron 
variant is assumed to  have  had limited impact 
on the economy in 2022-Q1 and, thanks to the 
swift  lifting  of  restrictions,  consumption  is 
projected  to  have  rebounded,  leading  to  an 
estimated  0.3%  real  GDP  growth  in  the  first 
quarter.  

However,  Russia’s  war  of  aggression  against 
Ukraine  has  changed  the  outlook  for  the 
following  quarters.  The  high  level  of  inflation 
and  the  drop  in  consumer  confidence  are 
expected  to  curb  the  expansion  of  household 
consumption. Still, lagged automatic indexation 
of wages and social benefits are set to support 
purchasing  power  moving  forward  into  2023 
when  inflation  is  projected  to  substantially 
decrease. Starting in March 2022, the inflow of 
people  fleeing  Ukraine  is  expected  to  have  a 

62 

The  strong  performance  of  employment  in 
2021  put  Belgium  on  a  strong  footing  for 
2022, as reflected by the high vacancy rate at 
the  beginning  of  the  year.  However,  the  rising 
uncertainty  and  the  expected  slowdown  in 
growth 
the 
performance  of  the  labour  market  in  the 
second  part  of  2022.  Employment  growth  is 
forecast 
in  2022.  The 
unemployment  rate  is  expected  to  improve  to 
5.8% in 2022 and to 5.6% in 2023, consistent 
with economic growth. 

to  moderate 

is  projected 

reach  1% 

to 

Inflation on the rise 

in  2021.  The  sharp 

Headline  inflation  is  forecast  to  reach  an 
exceptionally high level in 2022, at 7.8%, after 
3.2% 
increases  of 
wholesale  gas  and  electricity  prices  have 
transmitted  quickly  to  retail  prices,  which  are 
expected to remain high this year. At the same 
time,  food  prices  are  on  the  rise  and  core 
inflation  is  projected  to  reach  3.8%  in  2022 

-8-6-4-20246814151617181920212223Graph II.1.1: Belgium -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
  
and  3.4%  in  2023.  The  gradual  fall  in  energy 
prices  is  forecast  to  push  headline  inflation 
down to 1.9% in 2023.  

The  budgetary  response  to  the  energy  crisis 
causes 
strain  on  government 
finances  

further 

The  general  government  headline  deficit 
narrowed considerably in 2021 to 5.5% of GDP, 
according to notified data.  The decrease in the 
government  balance  deficit  reflects  mainly  the 
stronger-than-anticipated  rebound  in  revenue 
collection  due  to  a  stronger  macroeconomic 
lower-than-expected 
performance, 
notably 
execution, 
government 
concerning  public  investment  and  expenditure 
in relation to the COVID-19.  

and 
spending 

The  government  budget  deficit  is  projected  to 
decrease  moderately  in  2022,  to  5%  of  GDP. 
While the bulk of government measures related 
to the pandemic are expected to be withdrawn, 
Belgium’s fiscal outlook in 2022 is significantly 
affected  by  the  budgetary  response  to  the 
energy  crisis.  Temporary  measures  adopted  in 
response to high energy prices are set to weigh 
on  public  finances  in  2022.  In  addition,  the 
automatic  indexation  of  public  sector  wages 
and  social  benefits  to  rising  consumer  prices 
leads to rapidly growing public spending, which 
are  only  partly  offset  by  the  impact  of  higher 
wages  on  the  revenue  side.  Furthermore,  the 

Euro Area Member States, Belgium 

adopted 

government 
defence 
spending  and  the  Commission’s  forecast  also 
takes into account the budgetary impact of the 
inflow of people fleeing Ukraine.  

additional 

In 2023, the government deficit is projected to 
decrease slightly, to 4.4%, as the vast majority 
of measures adopted in response to the energy 
crisis  and  to  COVID-19  are  assumed  to  be 
withdrawn.  At  the  same  time,  the  automatic 
indexation  of  public  sector  wages  and  social 
benefits, as well as lower corporate tax revenue 
due  to  rising  input  prices  and  wages,  would 
have  a  negative  impact  on  the  government 
budget  balance. 
the  high 
government  deficit  in  2023  also  reflects  the 
growth  in  non-crisis  current  expenditure,  which 
is notably due to rising ageing costs and to the 
adopted 
budgetary 
of 
by 
permanent  measures 
compensating measures. 

recently 
not 

In  addition, 

impact 

offset 

The  government  debt-to-GDP  ratio  decreased 
to  108%  in  2021,  reflecting  the  rebound  of 
economic output and its positive impact on the 
denominator.  The  debt  to  GDP  ratio  is  set  to 
decrease to 107.5 % in 2022 and to stabilise in 
2023,  as  the  favourable  snowball  effect  from 
higher  inflation  (as  measured  by  the  GDP 
deflator)  would  be  offset  by  the  still-high 
government deficit. 

63 

bn EURCurr. prices% GDP02-17201820192020202120222023507.2100.01.61.82.1-5.76.22.01.8246.848.71.41.91.8-8.26.44.22.5120.223.71.21.42.0-0.44.40.80.3122.224.12.03.04.4-6.17.8-0.13.0432.985.43.30.62.0-5.59.63.33.9426.184.03.41.41.6-5.99.13.64.1511.2100.81.51.82.2-5.66.02.01.81.42.02.4-5.86.12.22.00.10.4-0.6-0.3-0.50.00.00.0-0.60.30.40.6-0.2-0.30.81.51.60.01.81.00.8Unemployment rate (a)8.06.05.55.86.35.85.62.21.82.0-1.54.26.05.51.41.41.54.4-0.25.04.415.511.612.420.216.112.412.61.71.51.81.34.54.53.01.92.31.20.43.27.81.9-0.2-1.00.90.7-0.7-2.51.01.0-0.40.61.00.9-0.6-0.22.7-0.80.10.80.6-1.1-0.6-2.2-0.9-2.0-9.0-5.5-5.0-4.4-2.4-1.9-3.0-5.8-4.6-4.5-4.2100.399.897.7112.8108.2107.5107.6Structural budget balance (d)General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesTrade balance (goods) (c)Current-account balance (c)General government balance (c)Terms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.1.1:Main features of country forecast - BELGIUM2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
 
 
     
 
 
2.  GERMANY 

High  energy  and  raw  material  costs  and  supply  bottlenecks  are  holding  back  the  rebound  of 
exports and investment. This is, however, offset by recovering spending on services, a solid labour 
market  and  the  use  of  accumulated  savings,  which  are  expected  to  drive  private  consumption 
growth despite the surge in inflation (6.5% in 2022 and 3.1%  in 2023). GDP is forecast to grow 
by  1.6%  in  2022  and  2.4%  in  2023.  The  general  government  deficit  is  expected  to  continue 
decreasing (2.5% in 2022 and 1% in 2023) as additional public spending on defence, the green 
transition and in reaction to heightened energy prices is compensated by solid tax revenues. 

Another interrupted rebound 

and 

industrial 

in  early  2022  supported 

Following  subdued  growth  in  2022-Q1,  at 
0.2%,  the  relaxation  of  COVID-19  containment 
measures 
the 
consumption  of  contact-intensive  services.  In 
January 
and 
February 
construction  activity  was  up  relative  to  late 
2021.  However,  in  March,  the  fallout  of  the 
Russian invasion of Ukraine and the imposition 
of  COVID-19-related  lockdowns  in  some  of 
China’s  industrial  hubs  resulted  in  renewed 
supply bottlenecks, soaring energy and material 
costs  and  a  further  uptick  in  already  high 
consumer price inflation.  

A host of headwinds 

These developments are expected to be a drag 
on  growth  in  the  upcoming  quarters,  with 
manufacturing  and  exports  set  to  continue  to 
be  slowed  by  trade  disruptions  caused  by  the 
war  in  Ukraine  and  the  lockdowns  in  China. 
Germany is intensifying the steps to reduce its 
dependency  on  Russian  energy  by  diversifying 
suppliers  and  speeding  up  the  take-up  of 
renewables,  among  other  measures.  However, 
in  the  short-to-medium  term,  still  high  energy 
prices  are  expected  to  depress  production  in 

64 

key  sectors  in  early  stages  of  the  value  chain 
(such as metals and chemicals). 

Uncertainty  about  the  outcome  of  the  war  in 
Ukraine is projected to have a negative impact 
on investment. At the same time, the unwinding 
of  significant  industry  and  construction  order 
backlogs  should  benefit  growth  later  this  year 
and in 2023, as some of the supply bottlenecks 
ease.  Household  consumption  is  set  to  be 
impaired  by  elevated  prices,  although  in  the 
coming  quarters  this  is  expected  to  be  partly 
offset by the ongoing recovery in the spending 
that had been constrained by the pandemic.  

Overall,  real  GDP  is  projected  to  fall  in  Q2-
2022.  Growth  is  set  to  remain  muted  at  1.6% 
in  2022  and  to  strengthen  somewhat  to  2.4% 
in  2023  as  the  economy  adapts  to  trade 
disruptions. The possibility of a sudden stop of 
gas  delivery  from  Russia  entails  a  significant 
downside risk to the outlook.  

Employment continues to improve 

in 

After  peaking  at  4.1% 
late  2020, 
unemployment  declined  to  a  historically  low 
2.9%  in  March  2022.  Although  the  easier 
conditions  for  access  to  the  short-time  work 
scheme have been extended until mid-2022, its 
take-up has been very low in recent months. In 
2022-Q1,  employment  recovered  to  the  pre-
level.  Hiring  expectations  are 
pandemic 
altogether  close 
levels  and 
reported labour shortages continue increasing. 

to  pre-crisis 

Wages grew by 3.5% in 2021, partly through a 
recovery  in  hours  worked.  Wage  growth  is  set 
to continue in 2022 and 2023, supported by an 
increase in the minimum wage and a tightening 
inflation 
labour  market.  However, 
compensation  in  the  wage  negotiations  later 
this  year  (notably  in  the  engineering  and 
chemical  sectors  and  civil  service)  is  expected 

the 

-6-5-4-3-2-10123414151617181920212223Graph II.2.1: Germany -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
       
Euro Area Member States, Germany 

to  be  partial  and  staggered.  With  consumption 
still 
limited  by  restrictions,  the  household 
saving  rate  remained  high  at  22.6%  in  2021. 
For 2022 and 2023 it is expected to decline to 
offset higher prices as spending picks up. 

Germany’s  current  account  surplus  is  set  to 
decline in 2022 (to just above 6% of GDP), due 
to  trade  disruptions,  the  resumption  of  foreign 
travel  and  more  expensive  energy  imports.  In 
2023, the surplus is expected to edge up again 
as export growth picks up. 

Inflation to stay elevated 

In April 2022 HICP inflation soared to 7.8% and 
is  expected  to  reach  6.5%  for  the  year  on 
average,  driven  by  the  surge  in  energy  prices 
and  rising  input  costs  amid  strong  demand. 
Lingering  pass-through  of  higher  costs  into 
prices, and a boost to service sector wages, due 
to  an  increase  in  the  minimum  wage  in  late 
2022, are expected to maintain inflation above 
3% in 2023. 

Deficit and debt level decreasing 

In 2021, the deficit decreased to 3.7% of GDP, 
turning out lower than initially expected, mostly 
due  to  a  smaller  take-up  of  the  measures  to 
alleviate the impact of the pandemic. 

In 2022, the deficit is projected to decrease to 

2.5%  of  GDP.  While  pandemic-related  support 
measures  are  phased  out,  measures 
in 
response  to  the  war  in  Ukraine  like  additional 
spending  for  defence  and  humanitarian  aid 
increase  government  expenditure,  as  does 
green  investment  by  the  Energy-  and  Climate 
Fund.  Furthermore,  in  reaction  to  the  rising 
energy  prices,  the  government  has  adopted  a 
series  of  targeted  one-time  payments  to 
households that  weigh  on  the  budget  in  2022. 
At  the  same  time,  robust  tax  revenues  are  set 
to  lead  to  an  overall  improvement  of  the 
headline balance. 

In  2023,  the  government  plans  to  increase  its 
spending  in  defence,  while  tax  revenues  are 
projected  to  continue  rising.  Consequently,  the 
deficit is expected to decrease to 1.0% of GDP. 

Government  debt  peaked in  2021 at 69.3% of 
GDP  and  is  projected  to  decrease  to  66%  in 
2022  and  64%  in  2023.  This  declining  debt 
ratio  is  partly  driven  by  the  impact  elevated 
inflation has on growth of nominal GDP, as well 
as  the  reduction  in  the  portfolio  of  bad  banks 
and  the  use  of  cash  reserves  accumulated 
during the height of the pandemic. Germany is 
returning to a path of debt reduction similar to 
that seen before the pandemic. 

65 

bn EURCurr. prices% GDP02-172018201920202021202220233570.6100.01.31.11.1-4.62.91.62.41763.049.40.81.41.6-5.90.14.13.7801.322.41.71.03.03.53.10.50.2783.922.01.13.41.8-2.21.50.82.71694.647.54.62.31.1-9.39.92.44.21497.041.94.23.92.9-8.69.34.15.13678.5103.01.51.91.1-5.03.11.32.41.01.61.8-2.81.12.32.6-0.1-0.1-0.1-0.91.0-0.20.10.4-0.5-0.7-0.80.8-0.6-0.20.71.40.9-0.80.00.80.5Unemployment rate (a)6.83.23.03.73.63.33.21.82.93.40.43.43.44.01.23.23.24.30.52.62.117.118.718.423.322.618.215.81.32.02.11.63.05.43.61.51.91.40.43.26.53.10.4-1.01.12.9-4.2-1.81.87.06.76.25.65.14.75.26.08.17.67.17.26.16.5-1.31.91.5-4.3-3.7-2.5-1.00.91.30.7-2.4-2.6-1.8-1.070.561.258.968.769.366.464.5General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.2.1:Main features of country forecast - GERMANY2021Annual percentage changeGDP 
 
 
     
 
 
3.  ESTONIA 

Real  GDP  growth  is  forecast  to  slow  sharply  to  1.0%  this  year,  after  8.3%  in  2021.  The 
heightened  uncertainty,  commodity  price  increases  and  trade  disruptions  linked  to  Russia’s 
invasion  of  Ukraine  are  holding  back  investment  and  trade  flows,  while  private  consumption  is 
still set to increase, thanks to the savings buffer built over the past two years. The labour market 
is  expected  to  integrate  people  fleeing  from  Ukraine  only  gradually,  driving  unemployment  up. 
Inflation is forecast at double-digit rate in 2022, falling quickly to 2.5% in 2023. The government 
deficit is projected to rise from 2.4% of GDP in 2021 to 4.4% in 2022 and 3.7% in 2023, due to 
additional  measures  to  address  energy  security  and  defence  needs,  supporting  refugees  and 
cushioning the social impact of price increases.  

Growth prospects curtailed 

Real  GDP  grew  by  8.3%  in  2021,  but  slowed 
sharply already at the beginning of this year, as 
consumers and investors adjusted to the surge 
in  commodity  and  energy  prices.  Russia’s 
invasion  of  Ukraine  and the  ensuing  sanctions, 
have  disrupted  trade  flows  and pushed  energy 
prices  further  up.  This  dampened  the  positive 
the 
effect  on  consumption  of 
remaining  COVID-19  related  restrictions,  as  in 
this new context households spent only a small 
part  of  the  extra  savings  accumulated  during 
the  pandemic  and  of  the  assets  withdrawn 
from the second pillar pension funds. 

removing 

Reduced imports of mineral fuels entail smaller 
exports  of  these  or  linked  products,  such  as 
refined  fuels  and  petrochemicals.  Exports  of 
higher  value  added  goods  and  of  information 
technology  services  are  however  forecast  to 
pursue  the  robust  expansion  of  recent  years, 
allowing  the  current  account  to 
improve, 
despite this year’s worsening terms of trade. 

Estonia’s  economy  appears  to  be  adjusting 
rapidly  to  the  rerouting  of  import  and  export 
flows,  including  of  services  such  as  tourism. 
However,  it  is  still  subject  to  the  general  risks 
of  further  disruption  to  the  supply  of  key  raw 
materials and faster increase of their price. 

together  with 

The uncertainties about the development of the 
war, 
renewed  supply-chain 
tensions,  weigh  on  investment  decisions,  in 
particular of foreigners. Part of the decrease in 
gross  fixed  capital  formation  is  due  to  the 
unwinding  of  a  significant 
in 
intangibles  recorded  at  the  turn  of  2020-21, 
which  determined  similar  fluctuations  in  the 
imports of services. As a result, real GDP is set 
to  contract  in  the  first  half  of  the  year  and  to 
rebound  subsequently,  averaging  an  annual 
growth rate of 1.0% in 2022 as a whole.  

investment 

In  2023,  Estonia  is  expected  to  diversify  its 
import and export markets, further reducing its 
dependency  on  gas  and  other  critical  inputs 
imported  from  Russia  and  Belarus.  Investment 
is  forecast  to  bounce  back  in  2023,  as  supply 
bottlenecks  subside  and  financial  conditions 
inflows  are 
remain  favourable.  EU  funds 
and 
expected 
support 
renewable  energy  projects.  The  push 
to 
accelerate  the  green  transition,  combined  with 
the higher priority given to security and defence 
factors, are also set to boost investment. 

construction 

to 

Wage growth falls behind inflation 

The  recovery  in  employment  levels  started 
much later than that in economic output, and is 
being  further  delayed  in  the  current  juncture. 
The 
is 
inflow  of  people  fleeing  Ukraine 
projected  to  add  some  5,000  people  to  the 
labour force this year and 3,000 more in 2023. 
This 
to 
unemployment, as these displaced persons find 
jobs more slowly than natives due to language 
and skills barriers. In turn, the additional labour 

temporarily  add 

is  expected 

to 

66 

-8-6-4-2024681014151617181920212223Graph II.3.1: Estonia -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
Euro Area Member States, Estonia 

the withdrawals from the second pillar pension 
funds.  

In 2022, the deficit is projected to widen again 
to  4.4%  of  GDP,  even  though  the  COVID-19 
expenditure measures have largely expired and 
tax  revenues are  expected  to  remain  relatively 
buoyant  thanks  to  strong  growth  of  tax  bases. 
The higher projected deficit largely reflects new 
spending on measures mitigating the impact of 
high  energy  prices,  in  security  and  defence,  in 
integration  of  displaced  persons  and  in  other 
social measures, adding up to over 2% of GDP.  

As some of these expenditure measures are set 
to be permanent (defence, social spending) and 
not  offset  by  compensating  measures,  the 
deficit  is  projected  to  remain  at  a  relatively 
elevated  level  of  3.7%  of  GDP  in  2023.  The 
forecast  incorporates  expenditure  financed  by 
RRF  grants,  which  is  set  to  gradually  increase 
from 0.4% of GDP in 2022 to 0.7% in 2023.  

Public debt is forecast to increase from 18.1% 
of  GDP  in  2021  to  23.5%  in  2023,  still  the 
lowest ratio in the EU. 

force  is  expected  to  exert  a  certain  drag  on 
wages,  which  were  rapidly  rising  in  several 
sectors  as  the  economy  recovered  fast  from 
the  COVID-19  crisis  and  some  shortages  of 
skilled  workers  emerged.  Despite  persistently 
tight labour market conditions in the expanding 
sectors,  compensations  per  employee  are 
forecast  to  increase  by  7%  in  2022,  implying 
lower real wages, and by 4.5% in 2023. 

Inflation  to  peak  in  early  2022,  then  to  fall 
rapidly 

HICP  inflation  increased  quickly  towards  the 
end of 2021 and reached double-digit  rates in 
January-April  2022.  It  is  forecast  to  average 
11.2%  in  2022,  as  the  soaring  prices  of 
imported  energy  and  food  affect  consumer 
price dynamics.  

The  prices  of  imported  energy  and  other 
commodities  are,  however,  expected  to  stop 
increasing by mid-2022 and go back to pre-war 
levels  by  end-2023.  Therefore,  headline 
inflation is forecast to drop to 2.5% next year. 

Additional  government  support 
deficit 

increases 

The  general  government  deficit  improved  to 
2.4%  of  GDP  in  2021  on  the  back  of  the 
economic  recovery.  At  the  same  time,  tax 
revenues were boosted by about 1% of GDP by 

67 

bn EURCurr. prices% GDP02-1720182019202020212022202330.7100.03.34.14.1-3.08.31.02.414.848.43.94.34.1-2.56.42.51.56.220.32.61.03.03.03.92.00.38.828.65.10.06.119.93.3-7.05.024.780.56.93.96.5-5.019.83.04.924.680.37.15.73.80.920.6-0.64.330.398.83.54.54.3-2.08.11.12.44.42.44.14.45.0-0.42.10.02.0-1.5-1.22.8-1.6-0.3-0.5-1.12.1-4.3-0.52.90.60.50.91.3-2.70.10.71.0Unemployment rate (a)8.95.44.56.96.26.86.98.08.68.45.37.67.04.55.15.25.55.5-0.66.73.05.112.312.716.411.99.010.04.54.03.2-0.35.58.13.23.43.42.3-0.64.511.22.50.70.0-0.71.10.6-2.21.0-9.5-4.7-3.4-0.6-4.4-5.9-5.2-4.60.82.5-0.3-0.71.32.30.5-0.60.1-5.6-2.4-4.4-3.70.0-1.5-0.8-3.4-3.3-3.8-3.07.18.28.619.018.120.923.5Private ConsumptionTable II.3.1:Main features of country forecast - ESTONIA2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Note : Contributions to GDP growth may not add up due to statistical discrepancies.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
     
 
 
4. 

IRELAND 

GDP  is  expected  to  keep  increasing  significantly,  by  5.4%  in  2022  and  4.4%  in  2023,  although 
slightly  slower  than  previously  expected  due  to  higher  inflation,  supply  bottlenecks  and 
uncertainty  created  by  the  Russian  aggression  against  Ukraine,  which  will  negatively  affect 
private  consumption  and  investment.  Net  exports  are  projected  to  remain  resilient  and  an 
important  source  of  growth.  Inflation  is  rising  and  expected  to  remain  high  for  longer,  albeit 
moderating in 2023. The fiscal outlook is set to further improve, with the budget balance set to 
reach a surplus of 0.4% of GDP in 2023. 

Favourable  domestic  developments  but 
geopolitical headwinds  

Ireland’s  real  GDP  grew  robustly  in  the  first 
quarter  of  2022,  driven  by  private  demand, 
which  benefitted  from  the  ending  of  all 
COVID-related restrictions in February. Business 
sentiment  remained  upbeat  at  the  entry  into 
the  second  quarter,  indicating  that  conditions 
for  growth  remain  broadly  intact  despite  the 
impact  of  Russia’s  invasion  of  Ukraine.  While 
Ireland’s  direct  economic  exposure  to  Russia 
and Ukraine is minor, as a highly open economy 
it  remains  exposed  through  trade  and  supply 
chain 
linkages,  as  well  as  through  rising 
inflation, which erodes real household incomes.  

Private  consumption  is  facing  opposing  forces. 
On  the  one  hand,  post-pandemic  conditions  of 
expanded 
consumption  opportunities  and 
significant accumulated savings favour a rise in 
spending.  The  labour  market,  supported  by 
government  policies,  has  emerged  from  the 
pandemic  without  scarring  and  has  been 
performing  strongly,  with  employment  rising 
rapidly  and  labour  shortages  favouring  wage 
rises. Following the winding-down of two large 
pandemic support schemes, the unemployment 
rate stood at 5.5% in March. On the other hand, 
Russia’s  invasion  of  Ukraine  is  a  headwind  to 

68 

low 

the economy. Consumer sentiment has fallen to 
an  18-month 
in  April  as  households 
reassess  the  impact  of  rising  energy  and  food 
prices  on  their  finances  and  curtail  spending 
plans.  Hence,  private  consumption  is  likely  to 
decelerate  in  the  short  term,  growing  by  5.7% 
in 2022 and 4.1% in 2023.  

in 

the 

Higher  uncertainty  and  supply  bottlenecks  are 
set  to  dampen  investment.  Following  buoyant 
investment in  machinery and equipment in the 
current 
second  half  of  2021, 
environment  companies  in  Ireland  might  tend 
to  postpone  further  acquisitions.  Construction 
investment,  which  is  facing  a  revival  due  to 
high  private  demand  and  public  investment 
plans,  is  grappling  with  shortages  of  material 
and 
in 
labour.  Multinational  corporations 
Ireland, traditionally a source of strong growth, 
are reportedly less affected by the war-induced 
repercussions and are likely to broadly maintain 
investment  activities,  although  to  a  lesser 
extent.  

in 

information 

Net  exports  are  projected  to  remain  positive 
and  an  important  driver  of  growth,  given  their 
concentration 
technology, 
pharmaceutical and medical equipment sectors, 
which  have  fared  well  since  the  pandemic. 
Overall, Ireland’s economy is projected to grow 
by  5.4%  in  2022  and  4.4%  in  2023.  Modified 
reflects 
domestic  demand,  which  better 
is 
underlying  domestic  economic  activity, 
expected to expand by 4.6% in 2022 and 3.8% 
in 2023.    

High inflation to stay for longer   

HICP  inflation  rose  in  early  2022  amid  higher 
energy prices and persistent supply bottlenecks 
across  a  variety  of  goods  segments.  Russia’s 
invasion  of  Ukraine  exacerbated  pressures  on 
energy  prices,  which  are  now  expected  to 
remain high for longer, and created new supply 

-35-25-15-5515253514151617181920212223Graph II.4.1: Ireland -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
                    
disruptions of food products for which Russia or 
Ukraine  are  major  producers.  Ireland’s  HICP 
reached  5.9%  in  the  first  quarter  of  2022. 
Inflationary  pressures  have  become  broad-
based  amid  high  post-pandemic  demand, 
supply bottlenecks and second-round effects of 
high energy prices. Inflation is expected to peak 
around  mid-2022  and  moderate  thereafter  as 
the impact of high energy prices starts to wane. 
HICP  is  forecast  to  reach  6.1%  in  2022  and 
3.1% in 2023.    

Risks  to  the  outlook  have  increased.  These 
include 
the 
chain 
persistence  of  high  inflation  for  longer  than 
expected and a potential inflation-wage spiral. 

disruptions, 

supply 

Deficit to turn to surplus in 2023 

Ireland’s general government deficit is forecast 
to decrease to 0.5% of GDP in 2022 from 1.9% 
in  2021.  Revenue  growth  in  2022  is  projected 
to  be  robust,  in  light  of  the  strong  outturns  in 
the first quarter of the year, which were fuelled 
by the easing of COVID-19 restrictions. The  

Euro Area Member States, Ireland 

phasing out of the pandemic-related support to 
companies and households is expected to curb 
nominal  growth  in  government  expenditure. 
Strong  nominal  GDP  growth  would  add  to  the 
reduction  in  the  deficit  ratio,  though  less  than 
in 2021, where GDP expanded at a double-digit 
rate. 

In  2023,  the  deficit  is  forecast  to  turn  into  a 
surplus  of  0.4%  of  GDP  as  pandemic-related 
spending ceases, while revenue growth is likely 
to  remain  robust  amid  a  buoyant  outlook  for 
the labour market and economic growth.  

The  general  government  debt-to-GDP  ratio  is 
projected  to  decrease  to  50.3  in  2022  from 
56%  in  2021,  and  further  to  45.5%  in  2023, 
amid planned decreases in cash reserves in the 
order of 1% of GDP for both years.  

69 

bn EURCurr. prices% GDP02-17201820192020202120222023421.5100.04.29.04.95.913.55.44.4102.524.32.33.73.2-11.15.75.74.150.412.02.15.36.89.45.41.51.299.123.56.9-8.999.5-22.9-37.64.25.4568.4134.86.611.510.49.516.66.04.9398.694.66.03.341.7-7.4-3.76.25.0315.274.83.86.45.13.811.53.63.83.1-1.129.9-14.4-12.82.62.40.2-1.11.00.2-0.40.00.01.710.7-26.521.425.82.21.81.33.22.9-1.53.92.80.8Unemployment rate (a)9.05.85.05.96.24.65.02.52.53.42.43.63.87.8-0.4-3.01.4-4.7-5.21.34.010.010.610.225.221.614.612.41.40.74.2-1.2-0.44.84.11.40.70.9-0.52.46.13.1-0.1-6.44.9-1.8-7.5-1.00.424.333.633.138.941.040.740.1-1.84.9-19.9-2.714.312.813.1-5.20.10.5-5.1-1.9-0.50.4-3.00.02.3-2.6-3.2-2.0-0.964.163.157.258.456.050.345.5General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.4.1:Main features of country forecast - IRELAND2021Annual percentage changeGDP 
 
 
 
     
 
 
5.  GREECE 

Following  a  rapid  recovery  from  the  pandemic  and  a  promising  start  in  the  first  months  of  the 
year, the Russian war of aggression against Ukraine has clouded the outlook on Greece. Growth is 
expected to ease but remain solid, primarily driven by the full  recovery of tourism by the end of 
the forecast  horizon.  High inflation is expected to weigh on households’ real disposable income, 
but  the  fall  is  being  partly  cushioned  by  government  support  measures.  Emergency  fiscal 
measures are due to expire in 2022 and a primary surplus is expected for 2023. 

Growth to ease but remain solid 

reflecting 

Despite  prolonged  uncertainty  due  to  the 
successive  waves  of  the  pandemic,  the  Greek 
economy  recovered  quickly  in  2021,  offsetting 
almost  entirely  the  sharp  economic  decline 
from 2020. Greece’s real GDP grew by 8.3% in 
2021, 
the  better-than-expected 
tourism  season,  while  private  consumption 
almost fully recovered. Growth was also driven 
by a notable boost in private investment, while 
goods  exports  continued  growing,  as  the 
country  benefited  from  the  recovery  in  the  EU 
and in other trading partners. 

is 
The  turmoil  on  global  energy  markets 
inflationary 
increase  domestic 
expected  to 
pressures  and  weigh  on  the  real  disposable 
income  of  households.  However,  government 
support  measures,  increases  in  the  minimum 
wage, and the savings accumulated  during the 
pandemic are expected to partially cushion the 
negative  effects  on  private  consumption. 
Heightened  risk  aversion,  along  with  increased 
supply  bottlenecks,  may  delay  the  kick-off  of 
new  investment  projects,  but  the  economy  is 
also  set  to  benefit  from  the  deployment  of 
RRP-financed  projects.  Export  growth 
is 
forecast  to  remain  solid  on  account  of  the 
recovery  in  tourism,  which  is  estimated  to 
remain  resilient  given  the  limited  share  of 
tourists  from  Russia,  Ukraine  and  Belarus  in 
total  arrivals.  Growth  of  goods  exports  is, 
however,  expected  to  decrease  compared  to 
previous  estimates  in  view  of  the  projected 
slowdown in the EU and the global economy as 
a  whole.  Overall,  real  GDP  is  forecast  to  grow 
by  3.5%  in  2022.  Growth  in  2023  is  expected 
to remain high, at 3.1%, driven by the  gradual 
recovery  of  real  disposable  income  and  a 
projected return of tourism to its pre-pandemic 
level.  

70 

Job  creation 
inflation 

to  continue,  amidst  high 

in 

gains 

agriculture 

Job  creation  showed  strong  growth  in  the 
the  back  of 
second  half  of  2021  on 
employment 
and 
manufacturing.  It  is  expected  to  continue  also 
in  2022,  despite  the  overall  slow-down  in 
economic activity this year. The minimum wage 
was  increased  by  7.5%  as  of  May  2022, 
following  a  modest  increase  by  2% in  January 
2022.  This  is  likely  to  support  nominal  wage 
growth  in  the  second  half  of  the  year,  given 
that  almost  a  third  of  the  total  employees  in 
the country receive a minimum wage. 

Inflation  is  expected  to  peak  in  the  second 
quarter  of  2022  and  remain  high  thereafter, 
before easing in 2023. Increasing international 
oil and gas prices are the main driver, while the 
surge in key input costs such as fertilisers and 
transport,  is  affecting  food  prices.  Headline 
inflation  is  projected  to  reach  6.3%  in  2022 
and 1.9% in 2023. 

Russian’s  military  aggression  against  Ukraine 
has magnified the downside risks for the Greek 
economy, while the outlook remains contingent 
upon  the  forecast’s  technical  assumptions. 
the  spending  outlook  of 
Estimates 
households  and  the  investment  dynamic  are 
assumptions. 
highly 

sensitive 

these 

for 

to 

-12-8-40481214151617181920212223Graph II.5.1: Greece -Real GDP growth andcontributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
Euro Area Member States, Greece 

tax-cuts  planned  by 

those  implemented  to  cushion  the  impact  of 
high  energy  prices,  are  phased  out.  The 
forecast  factors  in  the  prolongation  of  two 
growth-friendly 
the 
authorities,  which  build  on  measures  originally 
introduced  in  2021  and  2022  to  alleviate  the 
impact  of  the  pandemic,  which  were  set  to 
expire at the end of this year. These measures 
aim to bring the tax wedge on labour closer to 
the euro area average, support labour demand 
income, 
and  boost  households’  disposable 
which  is  expected  to  have  a  positive  effect  on 
consumption  and  the  economic  recovery  in 
general. 

Public  debt  is  expected  to  decrease  further  to 
186% of GDP in 2022 and to around 180% in 
2023,  supported  by  the  increase  in  nominal 
GDP in both years and primary surplus in 2023. 

the 

Notwithstanding 
better-then-expected 
outturn of 2021, fiscal risks remain substantial. 
They are mainly related to a possible activation 
of  state  guarantees  issued  as  part  of  the 
support  measures,  the  litigation  cases  against 
the public real estate company (ETAD) and the 
pending  ruling  of  the  Council  of  State  on  the 
the 
retroactive  compensation  for  cuts 
supplementary pensions and seasonal bonuses. 
On  the  upside,  corporate  income  profitability 
may  continue  to  outperform  expectations  as  it 
did for the 2021 fiscal outcome. 

in 

Uncertainty also concerns the tourist season, as 
real  disposable 
incomes  of  domestic  and 
foreign tourists may be reduced by inflation. On 
the  upside,  the  strong  performance  in  exports 
of  goods  over 
the  previous  period  of 
heightened  supply-side  disruptions  indicates 
some  resilience  of  Greece’s  exporting  firms, 
which  could  result  into  a  stronger  export 
performance than currently expected. 

Primary surpluses are set to return 

Greece’s  general  government  deficit  reached 
7.4% 
in  2021,  which  reflects  mainly  the 
pandemic-related  emergency  and  support 
measures  still  in  place.  This  outcome  is  better 
than  expected  earlier,  and  owes  to  the  fast 
recovery  of  personal  and  corporate  incomes. 
Public  debt  decreased  to  193% of  GDP  due  to 
the strong increase in nominal GDP. 

As  growth  continues,  and  some  of 
the 
pandemic-related measures have already been 
phased out, the deficit is expected to decrease 
to 4.3% of GDP in 2022, although it is also set 
to  be  impacted  by  the  temporary  measures 
taken in response to the high energy prices.  

The  general  government  deficit  is  expected  to 
decrease  to  1%  of  GDP  in  2023,  bringing  the 
primary  balance  to  a  surplus  of  1.3%  of  GDP. 
This  projected  decrease  assumes  that  most  of 
the  pandemic-related  measures,  as  well  as 

71 

bn EURCurr. prices% GDP02-17201820192020202120222023182.8100.0-0.41.71.8-9.08.33.53.1125.768.8-0.11.71.8-7.97.81.51.738.921.30.1-3.51.72.63.7-1.7-4.123.612.9-3.7-4.3-3.3-0.319.614.78.574.340.62.59.14.9-21.521.911.69.588.848.60.98.13.1-7.616.17.95.3181.999.5-0.51.12.0-8.68.23.52.9-0.50.01.2-4.98.62.61.6-0.11.40.01.4-0.90.00.00.30.20.6-5.50.70.91.50.24.60.9-1.20.51.21.2Unemployment rate (a)16.119.717.917.614.713.713.11.1-3.80.6-0.71.43.52.21.6-1.0-0.37.8-5.91.20.3:::::::1.3-0.20.2-0.82.14.82.12.00.80.5-1.30.66.31.9-0.3-1.2-1.4-4.10.6-1.61.2-13.8-12.6-13.0-11.8-14.9-17.4-17.0-7.9-3.5-2.4-7.9-8.3-8.4-6.4-7.50.91.1-10.2-7.4-4.3-1.04.75.32.7-4.1-5.5-3.0-0.9140.0186.4180.7206.3193.3185.7180.4General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.5.1:Main features of country forecast - GREECE2021Annual percentage changeGDP 
 
 
     
 
 
6.  SPAIN 

The  economic  recovery  is  expected  to  continue  in  Spain  despite  the  disruptions  created  by 
Russia’s war of  aggression against Ukraine.  Investments  under the RRP and  the recovery of the 
tourism sector are set to underpin economic growth over the forecast horizon. Real GDP is set to 
expand by 4.0% in 2022 and 3.4% in 2023. Headline inflation is projected to peak by mid-2022 
and  average  6.3%  in  2022.  The  labour  market  is  expected  to  remain  strong,  with  the 
unemployment  rate  at  its  lowest  level  since  2008.  The  general  government  balance  is  set  to 
improve, helped by strong revenues. 

Economic growth to slow down in 2022-H1 

relaxation 

Spain’s real GDP grew by 5.1% in 2021, partly 
recovering  from  the  unprecedented  decline  in 
2020 (-10.8%). Economic growth accelerated in 
the  second  half  of  the  year  thanks  to  the 
COVID-19  vaccination  campaign  and 
the 
pandemic-related 
of 
gradual 
containment  measures, 
of 
revival 
the 
international  tourism  and  the  strength  of 
domestic  demand.  The  Spanish  economy  was 
keeping  momentum  at  the  beginning  of  2022, 
but  supply  disruptions  and  escalation  of 
inflationary pressures in the context of the war 
have  slowed  down  economic  activity  since  the 
end of February. As a result, real GDP grew by 
0.3%  q-o-q  in  2022-Q1  (compared  to  2.2%  in 
2021-Q4),  restrained by the  strong  contraction 
of  private  consumption.  Further  deceleration  is 
expected  in  the  second  quarter  (0.1%)  due  to 
the persistence of headwinds to growth. 

Positive  prospects  despite  deterioration  of 
the balance of risks  

Overall, real GDP is projected to grow by 4.0% 
in  2022  and  by  3.4%  in  2023,  delaying  the 
closure of the gap with the pre-crisis GDP level 
until  mid-2023.  Revived  tourism  activity  has 
been the main driver of economic growth since 

72 

the  summer  of  2021  and  is  expected  to  keep 
momentum  in  2022,  allowing  for  a  large 
contribution  of  net  exports  to  GDP  growth. 
Economic  growth  is  set  to  accelerate  as  from 
2022-Q3  thanks  to  the  faster  implementation 
of  investments  under  the  RRP  and  some 
reactivation  of  private  consumption.  The  latter 
is  expected  to  be  supported  by  the  strong 
labour  market  and  the  savings  accumulated 
during 
the 
deterioration  of  households’  purchasing  power 
in a context of high inflation and declining real 
wages  is  expected  to  weigh  as  a  drag.  Private 
consumption  is  projected  to  remain  below  its 
pre-pandemic level over the forecast horizon.  

pandemic. 

However, 

the 

Downside risks are predominant in a context of 
large  global  uncertainty.  Energy  prices  have 
increased  in  Spain  faster  than  in  most  of  the 
euro  area  countries.  Further  price  escalation 
may  hit  particularly  hard  activity  in  sectors 
such  as  transport,  construction  and  electro-
intensive industry. Consumption and investment 
decisions  could  be  postponed  until  current 
disruptions  fade  away.  Private  consumption 
could  be  further  affected  by  the  persisting 
impact  of  inflation  on  households’  purchasing 
power,  particularly  on  those  at  the  bottom  of 
the  income  distribution.  In  addition,  shortages 
of  inputs  in  sectors  receiving  a  large  share  of 
RRP  funds  (e.g.  construction)  could  affect  the 
delivery  of  green  and  digital 
investments 
the  plan.  Conversely,  RRP 
envisaged 
investments  could  lead  to  wider  crowding-in 
effects  than  projected  and  a  stronger-than-
assumed  impact  on  potential  growth  could 
materialise from key RRP reforms. 

in 

Inflation to remain high in the medium-term 

Energy prices have been the main driver of the 
steep increase in the HICP rate since the spring 
of 2021 (7.9% y-o-y in 2022-Q1), although the 
pass-through  effect  into  the  prices  of  other 

-12-10-8-6-4-2024614151617181920212223Graph II.6.1: Spain -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
  
Euro Area Member States, Spain 

goods and services is becoming more and more 
evident.  HICP  inflation  is  expected  to  slowly 
to  ease  by  mid-year,  helped  by 
start 
governmental measures such as fuel discounts 
and  the  cap  on  wholesale  gas  prices.  Still, 
annual  HICP  inflation  is  forecast  to  increase 
from 3.0%  in  2021  to  6.3%  in  2022.  In  2023, 
the reversal of base effects of energy prices is 
expected  to  reduce  annual  HICP  inflation  to 
1.8%. Core inflation is projected to remain high 
over the forecast period, reaching 3.9% in 2022 
and easing to 2.7% in 2023.  

Strong labour market amid wage pressures 

The labour market gained resilience during the 
pandemic  thanks  to  the  short-term  work 
schemes  (so-called  ‘ERTEs’)  put  in  place.  As  a 
result,  at  the  end  of  2021  the  unemployment 
rate was at its lowest level since 2008.  Further 
decreases  are  expected  over  the  forecast 
horizon  (from  14.8%  in  2021  to  13.0%  in 
2023),  on  the  back  of  continued  job  creation 
and  the  availability  of  the  newly  created  ‘RED 
mechanism’  to  support  firms  and  workers  in 
transition. Wage growth is set to accelerate but 
at a slower pace than prices, resulting in losses 
in households’ purchasing  power and a  decline 
in households’ savings ratio going forward. 

Strong  revenues  drive  the  improvement  of 
the government balance 

Spain ended 2021 with a better than expected 
general  government  balance.  The  recovery  of 
revenue 
economic  activity  and  a  strong 
performance  drove  the  reduction  of  the  public 
deficit from 10.3% of GDP to 6.9%. In addition, 
most  COVID-19-related  measures  became 
more  targeted  and  created  space  for  the 
measures  to  cushion  the  impact  of  the  rising 
energy prices.  

In  2022,  the  government  deficit  is  set  to 
narrow  further  on  the  back  of  sustained 
economic growth and the continued strength of 
revenues, particularly from taxes on production 
and  imports.  On  the  expenditure  side,  the 
measures to ease the consequences of Russia’s 
war of aggression against Ukraine will weigh on 
the deficit that is projected at 4.9% of GDP.  

In  2023,  the  government  deficit  is  set  to 
continue  decreasing  (4.4%  of  GDP),  reflecting 
dynamic  economic  growth  and  expenditure 
moderation that compensate the gradual return 
of  revenues  to  their  traditional  elasticities. 
However, the indexation of pensions may result 
in  higher 
if 
inflationary pressures remain.  

than  envisaged  expenditure 

Public  debt  is  projected  to  gradually  decrease 
to  113.7%  of  GDP  in  2023  mostly  driven  by 
nominal GDP growth. 

73 

bn EURCurr. prices% GDP02-172018201920202021202220231205.1100.01.42.32.1-10.85.14.03.4669.755.61.11.71.0-12.04.60.83.8258.121.42.52.32.03.33.1-0.50.4242.020.10.16.34.5-9.54.38.35.8420.834.93.31.72.5-20.114.713.64.6402.633.42.23.91.2-15.213.98.34.81211.3100.51.52.42.2-10.55.14.23.31.22.61.8-8.24.12.03.40.00.3-0.2-0.50.50.00.00.3-0.60.5-2.20.52.00.00.42.22.6-7.66.63.31.6Unemployment rate (a)16.515.314.115.514.813.413.02.31.82.51.3-0.62.83.01.21.73.15.00.82.11.28.25.68.315.011.49.78.81.71.21.31.12.23.72.42.11.70.8-0.33.06.31.80.0-0.7-0.52.8-0.2-2.81.1-4.6-2.4-2.2-0.8-1.7-4.4-4.1-2.91.92.10.81.01.82.1-4.3-2.6-3.1-10.3-6.9-4.9-4.4-1.9-2.8-3.9-4.3-3.8-3.5-4.366.5100.598.3120.0118.4115.1113.7General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.6.1:Main features of country forecast - SPAIN2021Annual percentage changeGDP 
 
 
     
 
 
7.  FRANCE 

Economic activity is expected to slow down but to  keep  expanding  until the  end of the forecast 
horizon (+3.1% and +1.8% in 2022 and 2023), despite important supply disruptions and higher 
prices  caused  by  the  war  in  Ukraine.  The  rise  in  inflation  is  set  to  be  sizeable  and  persistent 
(+4.9% and +3.1% in 2022 and 2023), although largely attenuated by the measures adopted in 
response  to  high  energy  prices.  The  general  government  deficit  is  forecast  to  fall  to  4.6%  and 
3.2% of GDP in 2022 and 2023 respectively, while public debt is set to keep declining to around 
109% of GDP in 2023. 

Slow expansion after the quick recovery 

After  a  strong  recovery  in  2021  (+7.0%),  real 
GDP  is  set  to  expand  by  3.1%  in  2022  and 
1.8% in 2023.  

Following  stagnation  in  the  first  quarter  of 
2022,  GDP  is  expected  to  accelerate  in  the 
second  quarter  (+0.4%).  Services  are  set  to 
benefit  from  the  full  easing  of  sanitary 
industry  shows  signs  of 
restrictions  while 
resilience,  as  suggested  by  the  latest  surveys. 
GDP growth is then projected to remain positive 
but  subdued  until  the  end  of  the  year,  in  a 
context  of  high  inflation,  important  supply 
disruptions  and  heightened  uncertainty,  all 
exacerbated  by  Russia’s  invasion  of  Ukraine. 
The quarterly growth rate is forecast to slightly 
increase  in  2023  thanks  in  particular  to  the 
deceleration in inflation. 

to  growth  over 

All  demand  components  are  projected  to 
the 
contribute  positively 
forecast  horizon.  After the sharp decline in the 
first  quarter  of  2022,  private  consumption  is 
expected  to  benefit  from  the  full  reopening  of 
the  economy  in  the  second  quarter.  It  is  then 
forecast  to  be  subdued,  but  to  remain  in 
positive  territory,  supported  by  the  measures 
taken  by  the  government  to  mitigate  inflation 

74 

and  a  decline  in  the  savings  rate,  which  is, 
however,  expected 
remain  significantly 
to 
above  its  pre-crisis  level.  Following  its  strong 
recovery in 2021 (+11.6%), investment is set to 
slow  down  significantly  in  2022  (+2.0%),  in  a 
context  of 
shortages 
(especially  in  transport  equipment)  and  rising 
uncertainty.  Investment  is  then  projected  to 
slightly  accelerate  in  2023  (+2.9%),  but  to 
remain below pre-crisis growth rates. 

increasing 

supply 

After the fall of 2020, net exports are forecast 
to recover later and more slowly than the other 
GDP components. They are expected to  have a 
positive contribution to growth in 2022, thanks 
to the rebound in tourism, as well as in 2023. 

Labour market to remain resilient 

its 

rate 

The  labour  market  remained  dynamic  at  the 
end  of  2021,  with  the  unemployment  rate 
falling  much  below  its  pre-crisis  level  and  the 
activity 
pre-crisis 
exceeding 
performance.  However,  the  hours  worked  per 
remained  subdued,  pointing  at 
employee 
persistent  labour  hoarding.  Thus,  in  line  with 
the  activity,  total  employment  is  set  to  slow 
down  in  2022  (+1.1%,  still  supported  by  a 
strong  carry-over)  and  2023  (+0.4%).  The 
unemployment  rate  is  expected  to  reach  7.6% 
in  2022  and  2023,  significantly  below  its  pre-
crisis level.  

Inflation is expected to remain high in 2023 

largely 

Inflation  is  set  to  increase  to  4.9%  in  2022 
from 3.1% in 2021. The contribution of energy 
prices  is  expected  to  be  the  most  important, 
although 
the 
government’s  support  measures  (in  particular 
the cap on electricity and gas regulated prices). 
Core  inflation  is  set  to  accelerate  due  to  the 
delayed  transmission  of  the  increase  in  raw 
materials’ prices to non-energy goods. In 2023, 

attenuated 

by 

-10-8-6-4-20246814151617181920212223Graph II.7.1: France -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
     
Euro Area Member States, France 

despite  their  slowdown,  energy  prices  are  still 
expected  to  contribute  positively  to  inflation, 
and services’ prices are projected to be fuelled 
by wage increases and rent revaluations. Prices 
are,  thus,  set  to  remain  more  dynamic  than 
before the crisis (+3.1%).  

Public debt on a declining path 

The reduction in the general government deficit 
to 6.5% in 2021 was stronger than anticipated. 
This was mainly due to a better than expected 
improvement  of  the  macroeconomic  situation 
and  the  dynamism  of  tax  revenues,  including 
those linked to the housing market. These were 
offset  in  part  by  the  extension  of  some 
pandemic-related measures, such as the partial 
activity scheme and subsidies via the solidarity 
fund.  Other  new  expenses 
the 
subsidies  to  assuage  the  rise  in  energy  prices 
and  the  measures  included  in  the  French 
recovery plan France Relance, but not financed 
by the Recovery and Resilience Facility (RRF). 

included 

In  2022,  the  general  government  deficit  is  set 
to narrow further, to 4.6% of GDP. The decline 
is  set  to  be  driven  by  continued  dynamism  of 
tax revenues supported by  higher inflation, the 
unwinding of most pandemic-related measures 
and  the  lower  amount  of  recovery  measures 
under France Relance compared to 2021. These 
deficit-reducing  effects  are  expected  to  be 
partly  offset  by  the  measures  adopted  to 

mitigate  the  impact  of  high  energy  prices, 
worth  around  additional  EUR  23  bn.  (0.9%  of 
GDP), by the estimated budgetary impact of the 
investment  plan  France  2030  (0.1%  of  GDP) 
and  by  other  measures,  worth  0.1%  of  GDP, 
included  in  the  more  recent  Resilience  Plan  to 
mitigate  the  economic  effects  of  the  Russian 
invasion  of  Ukraine.  These  projections  also 
incorporate  the  estimated  cost  to  host  people 
fleeing  from  Ukraine,  which  is  assumed  to  be 
relatively  limited.  The  revenue-to-GDP  ratio  is 
expected to narrow, by some ¼ pp. of GDP, due 
to the withdrawal of the housing tax, the cut of 
the corporate income tax rate, the reduction in 
electricity  taxes  and  lower  RRF  grants  than  in 
2021.  In  turn, the  expenditure  ratio  is forecast 
to decline by around 2¼ pps. 

For  2023,  the  government  deficit  is  set  to 
narrow further to 3.2% of GDP. The revenue-to-
GDP ratio is expected to increase by around ¼ 
pp.,  mainly  due  to  the  unwinding  of  the  cut  in 
electricity  taxes.  These  projections  incorporate 
estimated  RRF  grants  of  0.3%  of  GDP.  The 
expenditure ratio is projected to keep declining, 
by 1¼ pps.  

After a decline in 2021, public debt is forecast 
to keep falling. From 112.9% of GDP in 2021, it 
is  set  to  decrease  to  111.2%  in  2022,  due  to 
the still dynamic growth and the projected high 
inflation, and to around 109% in 2023. 

75 

bn EURCurr. prices% GDP02-172018201920202021202220232483.6100.01.21.91.8-7.97.03.11.81301.952.41.41.01.8-7.14.73.42.0603.524.31.50.81.0-3.26.31.70.5605.724.41.23.34.0-8.611.62.02.9743.829.92.64.51.6-15.89.38.37.5795.232.03.33.12.3-11.98.06.76.02522.2101.61.21.91.7-8.46.93.42.01.41.52.1-6.56.72.71.90.00.00.0-0.20.00.1-0.4-0.20.4-0.3-1.10.20.30.30.41.01.3-0.91.81.10.4Unemployment rate (a)9.19.08.48.07.97.67.62.31.7-0.2-2.94.93.83.31.50.8-0.74.3-0.21.81.914.514.114.721.019.116.415.31.31.01.32.50.82.23.01.52.11.30.52.14.93.10.3-1.51.31.1-1.7-4.51.3-1.4-1.7-1.4-2.1-3.0-4.5-3.2-0.3-0.7-0.7-2.6-2.4-3.0-2.0-4.1-2.3-3.1-8.9-6.5-4.6-3.2-2.7-2.9-3.3-4.4-5.3-4.5-3.380.297.897.4114.6112.9111.2109.1General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.7.1:Main features of country forecast - FRANCE2021Annual percentage changeGDP 
 
 
     
 
 
8. 

ITALY 

Real GDP growth is forecast to moderate to 2.4% this year and slowing to 1.9% in 2023, as spill-
over  effects  from  Russia’s  military  aggression  against  Ukraine  exacerbate  existing  supply-chain 
disruptions  and  price  pressures.  The  inflation  rate  is  set  to  climb  to  close  to  6%  this  year  and 
averaging  2.3%  in  2023.  Government  deficit  and  debt  are  projected  to  decline  to  4.3%  and 
146.8% by 2023, as pandemic-related policy support is phased-out, but to remain at high levels.  

Geopolitical  tensions  impact  outlook  while 
pandemic-related drag fades 

Italy’s  economy  navigated  well  the  prolonged 
COVID-19 pandemic in 2021, when real output 
rebounded by 6.6%. However, rising input prices 
and  supply  bottlenecks  started  to  weigh  on 
industrial  activity  in  the  second  half  of  2021, 
while  rapidly  rising  energy  prices  dented 
households’  purchasing  power.  Real  GDP 
contracted in the first quarter of 2022 and the 
short-term  outlook  remains  subdued,  as  the 
economic  repercussions  of  Russia’s  military 
aggression  against  Ukraine  have  dented 
economic  sentiment  and  exacerbated  existing 
obstacles  to  expansion.  The  economy  should 
return to a more sustained expansion path next 
year, thanks to investment financed by the RRF. 

Real  GDP  growth  is  forecast  to  slow  to  2.4% 
this  year,  with  most  of  annual  growth 
attributable  to  a  carryover  effect,  due  to  the 
brisk  recovery  of  2021.  The  economy’s  return 
to pre-crisis output levels is thus postponed  to 
the  second  half  of  2022.  In  2023,  economic 
growth is expected to moderate to 1.9%, which 
is  still  sizeably  above  the  long-term  average. 
The  outlook  remains  subject  to  pronounced 
downside  risks.  Namely,  as  one  of  the  largest 
importers  of  Russian  natural  gas  among  EU 
countries,  Italy  would  be  severely  affected  by 
abrupt supply disruptions. 

Domestic  demand  supports  growth  amid 
strengthening headwinds 

Rising  employment  and  high  savings,  albeit 
accumulated  by  wealthier  households  with  a 
lower  propensity  to  consume,  are  likely  to 
support  private  consumption.  Still, 
rising 
consumer  prices  coupled  with  sluggish  wage 
growth  are  set  to  weigh  on  households’  real 
in 
disposable 
consumer  spending.  In  2021,  the  investment-
to-GDP  ratio  reached  the  highest  level  since 
2010  and  capital  spending  is  set  to  remain 

incomes  and 

thus  growth 

solid  on  the  back  of  RRF-financed  investment. 
Yet,  a  weaker  demand  outlook  and  worsening 
financing  conditions  are  expected  to  dampen 
corporate  investment.  Exports  are  forecast  to 
grow  in  line  with  slowing  growth  in  external 
demand,  while  the  energy-related  negative 
terms-of-trade effect is set to curb the current 
account  surplus.  The  recovery  in  tourism  is 
projected  to  support  services  exports  but  is 
unlikely to reach pre-crisis levels before 2023. 

Job market in lockstep with slowing activity 

The pace of employment growth is expected to 
be  in  line  with  slowing  economic  activity,  also 
indicated  by 
firms’  subdued  employment 
expectations.  Despite  a  significant  reduction  in 
the  use  of  short-time  work  schemes,  labour 
market  slack  remains  sizeable,  as  both  hours 
worked  and  headcount  employment  are 
projected to reach pre-pandemic levels only by 
the  end  of 
forecast  horizon.  The 
unemployment  rate  is  set  to  drop  to  8.9%  by 
2023, amid an increasing labour force. 

the 

Tight commodity markets spur price pressure 

Sharply rising energy and food prices are set to 
lift  HICP  inflation  to  almost  6%  in  2022  with 
price  pressures  expected  to  broaden  further. 
With  input  prices  and  inflation  expectations  at 
historically  high  levels,  rising  selling  prices  are 

76 

-10-8-6-4-20246814151617181920212223Graph II.8.1: Italy -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
set to keep inflation above 2% in 2023, despite 
a  waning 
impact  from  energy  prices.  By 
contrast,  wage  growth  is  expected  to  remain 
moderate,  as  several  wage  contracts  were 
already  renewed  just  before  the  onset  of  the 
energy  price  surge  in  mid-2021.  The  GDP 
deflator  is  projected  to  rise  by  3.1%  this  year, 
partly dampened by soaring import prices.  

While  improving,  general  government  deficit 
projected to remain high 

The  government  headline  deficit  decreased 
from  9.6%  of  GDP  in  2020  to  7.2%  in  2021. 
Fiscal  revenues  increased  markedly,  reflecting 
the  rebound  in  economic  activity,  in  particular 
private  consumption.  Moreover,  government 
primary 
decreased 
significantly as a  share of GDP, also thanks to 
the phasing out of part of the pandemic-related 
fiscal  measures.  However,  capital  expenditure 
rose  strongly,  reflecting  both  higher  public 
investment and grants for private investment. 

expenditure 

current 

Euro Area Member States, Italy 

this  year, 
including  measures  aimed  at 
mitigating the impact of higher energy costs on 
firms’  and  households’  budgets  as  well  as 
supporting firms operating in sectors still hit by 
the pandemic. Part of these costs are expected 
to  be  offset  by  spending  cuts  and  revenue 
increases,  including  an  extraordinary  tax  on 
energy 
The  2022  Stability 
Programme  announced  further  new  measures 
with  a  net  deficit-increasing  impact  of  around 
0.3%  of  GDP  in  2022.  They  are  however  not 
included  in  the  forecast  as  details  were  not 
available before the cut-off date. 

companies. 

to 

set 

investment 

Public 
increase 
is 
substantially, also due to projects supported by 
the  RRF,  while  interest  expenditure  is  expected 
to  remain  stable  at  3.5%  of  GDP.  Outlays 
related  to  the  inflow  of  people  fleeing  Ukraine 
increase  expenditure  by 
are  estimated  to 
around  0.1%  of  GDP  in  2022.  In  2023,  the 
government deficit is set to narrow to 4.3% of 
GDP,  thanks  to  declining  government  spending 
and accelerating revenue growth. 

The  general  government  deficit  is  projected  to 
decline further to 5.5% of GDP in 2022, due to 
higher revenues driven by economic growth and 
the  unwinding  of  most  of  the  pandemic 
emergency  fiscal  measures.  At  the  same  time, 
the  measures  included  in  the  2022  budget 
imply  a  deficit-increasing  impact  of  around 
1.2% of GDP in 2022. Additional fiscal support 
packages  were  adopted  in  the  first  months  of 

The  debt-to-GDP  ratio  is  forecast  to  follow  a 
downward  trend  over  the  forecast  horizon. 
From  155.3%  of  GDP  in  2020,  it  declined  to 
150.8% in 2021 due to the economic recovery 
and  a  favourable  stock-flow  adjustment.  It  is 
expected to reach 146.8% by 2023. 

77 

bn EURCurr. prices% GDP02-172018201920202021202220231775.4100.00.00.90.5-9.06.62.41.91025.857.80.20.90.2-10.65.22.21.4351.519.80.00.1-0.50.50.60.90.9353.519.9-0.93.11.2-9.117.06.24.1581.332.71.82.11.6-13.413.34.94.3538.330.31.53.4-0.7-12.114.26.14.21796.8101.20.11.50.2-8.76.62.81.5-0.11.10.2-7.96.22.71.80.00.1-0.4-0.30.20.00.00.1-0.30.7-0.80.2-0.20.00.00.80.1-10.37.52.41.8Unemployment rate (a)9.410.69.99.39.59.58.92.02.01.82.8-0.92.51.32.01.81.41.3-0.12.41.312.510.110.017.414.811.610.41.81.10.91.40.53.12.41.81.20.6-0.11.95.92.30.0-1.21.64.6-5.8-6.11.71.02.63.44.12.90.81.3-0.42.53.23.72.51.21.6-3.1-2.2-1.5-9.6-7.2-5.5-4.3-1.1-2.4-2.0-5.2-6.3-5.8-4.8118.4134.4134.1155.3150.8147.9146.8Private ConsumptionTable II.8.1:Main features of country forecast - ITALY2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)9.  CYPRUS 

Following a strong rebound of 5.5% in 2021, economic activity is expected to slow down to 2.3% 
in  2022  due  to  the  negative  impact  of  Russia’s  invasion  of  Ukraine  and  soaring  inflation.  The 
outlook  is  more  positive  for  2023,  as  tourism  is  expected  to  further  recover  and  global  energy 
prices  to  somewhat  ease.  Public  finances  are  set  to  continue  the  improvement  shown  in  2021, 
with headline balance increasing from -1.7% in 2021 to -0.3% in 2022. 

sectors  are  particularly  vulnerable  to  external 
shocks. 

GDP growth to slow down in 2022  

Real  GDP 
in  2021, 
increased  by  5.5% 
surpassing  the  2019  pre-pandemic  level.  Both 
domestic  and  external  demand  contributed  to 
growth.  Domestic  demand  was  supported  by 
the fiscal stimulus and a successful vaccination 
campaign,  which  allowed  a  gradual  lifting  of 
restrictions. Exports of non-travel services, such 
as  ICT,  financial  and  professional  services 
continued  to  expand  strongly.  However,  the 
tourism  sector      recovered  only  partially: 
compared  to  2019 
levels,  tourist  arrivals 
reached 48.7%, while revenues were at 56.4%.  

The Cypriot economy started 2022 on a strong 
footing,  but  Russia’s  invasion  of  Ukraine  and 
the  related  sanctions  are  expected  to  impact 
economic  activity,  especially 
tourism  and 
services  exports,  as  Russia  is  an  important 
market  for  both.    High  fuel  prices  and  rising 
inflation present an additional challenge for the 
tourist  sector.  Alongside  a  drop  in  consumer 
confidence,  high  inflation  will  also  impact 
private consumption and household investment 
in  2022.  At  the  same  time,  government 
to  decelerate 
expected 
consumption 
significantly, 
support 
the 
measures  are  progressively  being  phased  out. 
Overall, real GDP is forecast to grow by 2.3% in 
2022.  

pandemic 

is 
as 

is  expected 

A  stronger  growth  momentum  is  projected  to 
resume  in  2023,  with  3.5%  GDP  growth,  as 
tourism  demand 
recover 
significantly and the delayed partial indexation 
of  wages  is  set  to  support  purchasing  power. 
The  implementation  of  the  Cypriot  RRP  is 
expected  to  support 
investment  over  the 
forecast horizon.  

to 

Significant  uncertainty  and  downside  risks  to 
the  growth  outlook  remain,  as  the  tourism 
sector  and  other  export-oriented  services 

78 

Unemployment is set to rise temporarily 

The  unemployment  rate  remained  broadly 
stable  in  2021  at  7.5%.  Employment  and 
vacancies were on the rise at the end of 2021, 
whereas  the  slowdown  of  economic  activity  is 
set  to  put  brakes  on  the  labour  market  later 
this year. In 2022, unemployment is forecast to 
somewhat  increase  to  7.8%,  before  resuming 
its decreasing trend in 2023 to 7.3%.      

Inflation has increased 

Headline inflation is on the rise and is expected 
to reach 5.2% in 2022, up from 2.3% in 2021. 
This  is  mainly  due  to  exceptionally  high  oil 
prices,  as  Cyprus  depends  heavily  on  oil 
products.  The  prices  of  non-energy  industrial 
products  and  food  have  also  increased  as  a 
result  of  supply  chain  disruptions  and  the 
secondary impact from higher energy prices. In 
2023,  as  energy  prices  are  expected  to 
somewhat moderate and supply side  problems 
dissipate, inflation is projected at 2.7%. 

-12-8-40481214151617181920212223Graph II.9.1: Cyprus -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
Euro Area Member States, Cyprus 

Government deficit and public debt to decline  

The  general  government  deficit  improved  by 
more than 4 percentage points in 2021 to 1.7% 
of GDP on the back of strong economic growth.  

For  2023,  government  revenues  are  projected 
to  increase  on  the  back  of  the  economic 
recovery, while public expenditure is set to grow 
at  a  lower pace, allowing  the  budget  deficit  to 
decline to 0.2% of GDP. 

In  2022,  it  is  expected  to  further  improve  to 
is 
0.3%  of  GDP.  Government  expenditure 
forecast  to  decrease  with  the  phasing  out  of 
pandemic  support  measures  such  as  health 
sector  support  schemes,  wage  subsidies  and 
to  businesses.  However, 
liquidity  support 
government  revenues  are  expected  to  grow  at 
a 
less  positive 
to 
lower  pace  due 
macroeconomic outlook.   

the 

Public  debt  decreased  to  103.6%  of  GDP  in 
2021 on the back of high nominal GDP growth 
and thanks to cash reserves accumulated in the 
previous  year.  It  is  expected  to  decrease  to 
in  2022  and  2023, 
93.9%  and  88.8% 
respectively.  

79 

mio EURCurr. prices% GDP02-1720182019202020212022202323436.7100.02.15.75.3-5.05.52.33.514541.062.02.45.13.0-5.03.72.22.04702.620.11.63.612.714.88.03.11.84178.417.82.6-4.92.90.0-6.35.45.818984.881.03.07.37.5-5.114.01.74.618734.679.93.54.38.3-2.59.22.53.721864.593.32.35.04.1-6.24.63.64.52.52.94.3-0.82.72.92.80.10.71.5-2.3-0.60.00.0-0.42.2-0.5-1.93.4-0.60.71.55.33.8-0.51.20.91.8Unemployment rate (a)8.38.47.17.67.57.87.31.91.54.4-3.24.74.14.51.31.12.91.40.42.72.83.53.35.78.05.32.13.31.61.01.1-1.12.74.53.21.70.80.5-1.12.35.22.70.6-1.4-0.3-0.8-1.1-1.80.0-22.9-21.0-20.1-19.2-18.3-20.4-21.4-8.5-3.9-5.7-10.1-7.2-8.8-7.2-3.0-3.61.3-5.8-1.7-0.3-0.22.42.4-0.3-4.6-2.1-0.4-0.774.098.491.1115.0103.693.988.8Private ConsumptionTable II.9.1:Main features of country forecast - CYPRUS2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
     
 
 
10.  LATVIA 

Latvia entered 2022 with a solid growth momentum, with consumption, investment and exports 
set for a strong showing. However, due to Latvia’s relatively high exposure to trade with Russia, 
GDP  growth  is  expected  to  slow  to  2.0%  in  2022.  The  impact  will  be  felt  both  in  terms  of  lost 
export  revenue  as  well  as  in  the  rising  prices  of  key  raw  material  imports  that  will  add  to  the 
inflation woes coming from the global commodity markets. In 2023, growth is expected to pick up 
to  2.9%,  albeit  still  dampened  by  the  impact  of  high  inflation  and  the  economic  fallout  from 
Russia’s  invasion  of  Ukraine.  The  general  government  deficit  is  expected  to  remain  elevated  at 
7.2% of GDP in 2022, due to sizeable support to mitigate the impact of high energy prices and to 
ensure security of national energy supply, and to decline to 3.0% of GDP in 2023. 

Strong  growth  momentum  eroded  by  high 
inflation 

In  2021,  Latvia’s  economy  grew  by  4.5% 
surpassing its pre-pandemic level. However, the 
recovery  has  been  uneven  –  while  goods 
exports  and  public  consumption  spearheaded 
the recovery, household consumption remained 
subdued  and  exports  of  services  remained 
significantly  below  their  pre-crisis  level.  The 
employment  recovery,  while  still  solid,  lagged 
somewhat behind that of GDP. 

In 2023, growth is expected to pick up to 2.9% 
benefitting from solid growth in real disposable 
incomes, driven by solid wage and employment 
growth  as  well  as  increased  inflows  of  EU 
funds. Exports are set to bounce back from the 
loss of the Russian market. However, with  high 
price  growth  in  many  parts  of  the  economy 
expected to persist and with the war impacting 
negatively on investment decisions and inbound 
tourism, growth is expected to remain subdued. 

While Latvia was on course for another year of 
strong  growth,  driven  by  recovering  household 
consumption  and  rapid  growth  in  EU-funded 
investment,  Russia’s  invasion  of  Ukraine  has 
profoundly  changed  Latvia’s  growth  prospects 
for both 2022 and 2023. The war’s impact will 
play out through two main channels – a loss of 
trade  and  spiking  prices.  Latvia’s  exports  to 
Russia  and  Belarus  accounted  for  some  4.3% 
of  GDP  in  2021.  While  most  of  these  exports 
are  expected  to  dry  up,  the  impact  on  GDP  is 
set  to  be  limited  since  a  substantial  part  of 
them  were  re-exports  with  relatively 
low 
domestic  value  added.  Additionally,  disruptions 
of supply of metal and wood raw materials as 
well as of fertilisers, for all of which Russia is a 
major  supplier to  Latvia, is  expected  to  add  to 
already  strong  price  pressures  coming  from 
energy. This is set to result in double digit price 
growth 
industry  and  construction  with 
expected  knock-on  effects  on  consumer  prices 
in both 2022 and 2023. The high inflation and 
materials  shortages  are  expected  to  dampen 
private 
growth 
investments 
consumption.  Nevertheless, 
is 
forecast  to  grow  at  a  steady  pace  as  it 
continues  to  recover  from  the  impact  of  the 
COVID-19  restrictions.  Consequently,  real  GDP 
is forecast to grow by 2.0% in 2022.  

and 
the 

latter 

of 

in 

80 

Labour market to remain tight  

from  Ukraine  are  expected 

The recovery of the services sectors is expected 
to drive employment growth in 2022. However, 
once  employment  reaches  its  pre-pandemic 
level,  further  growth  is  expected  to  be  limited 
by a structural decline in labour supply. People 
fleeing 
to 
temporarily  add  to  the  labour  supply  and 
employment  growth.  However,  since  they  are 
expected  to  stay  for  only  a  few  months  on 
average,  their  long-term  impact  on  the  labour 
market  is  set  to  be  limited.  The  employment 
in  2023. 
growth 
Nevertheless,  the  unemployment  rate  is  set  to 
continue  declining  due  to  the  shrinking  labour 

thus,  set 

to  ease 

is, 

-8-3271214151617181920212223Graph II.10.1: Latvia -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
     
Euro Area Member States, Latvia 

force.  The  tight  labour  market  is  set  to  drive 
rapid wage growth in both 2022 and 2023. 

Energy and food prices set to drive a spike in 
inflation 

in 

Consumer price inflation is set to reach 9.4% in 
2022,  driven  by  rapid  growth  in  energy  and 
food  prices.  While  global  energy  commodity 
price  growth  is  expected  to  relent  in  spring 
2023,  the  knock-on  effects  of  rapid  price 
growth 
industry  and  construction  are 
expected to drive consumer price inflation over 
the forecast horizon. While Latvia’s intention to 
cease  importing  Russian  gas  as  from  2023  is 
expected  to  keep  energy  prices  at  a  high  level 
for longer, they are expected to decrease in the 
second  half  of  2023.  Nevertheless,  combined 
with price growth in other components, inflation 
is set to average 3.5% in 2023. 

Deficit to remain elevated in 2022 

The government deficit reached 7.3% of GDP in 
2021  and  was  mainly  driven  by  the  sizeable 
support  to  the  economy  during  the  COVID-19 
pandemic.  

In 2022, the government deficit is projected to 
remain at 7.2% of GDP. Main deficit-increasing 
measures  for  the  2022  budget  include  an 
increase  in  income  tax  allowance,  a  sizeable 
investment  package  and  an  increase  in  wages 

for  employees  in  healthcare,  investigation  and 
border  control,  and  education.  Moreover, 
support  to  households  and  companies  to 
mitigate the surge in energy prices, creation of 
a  national  energy  supply  security  reserves  as 
well as higher spending on defence and support 
to people fleeing Ukraine are set to ensure the 
deficit  remains  unchanged  despite  COVID-19 
support  measures  being  significantly  lower  in 
2022 than in 2021.  

Since  most  of  the  2022  expenditure  measures 
are  expected  to  expire  by  end  of  the  year,  the 
government  deficit  in  2023  is  projected  to 
decrease  to  3.0%  of  GDP.  Key  expenditure 
measures  affecting  the  2023  budget  balance 
include  some  remaining  COVID-19  support 
measures, 
like  the  purchase  of  vaccines, 
finalisation  of  public  investment  projects  and 
support  for  companies  to  stimulate  private 
investment,  as  well  as  increased  spending  in 
defence  and  support  to  the  people  fleeing 
Ukraine.   

The  forecast  also  incorporates  expenditures 
financed  by  RRF  grants,  which  are  set  to 
gradually  increase  from  0.4%  of  GDP  in  2022 
to 1.0% of GDP in 2023. 

The  debt-to-GDP  ratio  is  expected  to  reach 
47.0% in 2022 and to decrease in 2023 due to 
lower deficit. 

81 

mio EURCurr. prices% GDP02-1720182019202020212022202332866.5100.03.44.02.5-3.84.52.02.918027.454.93.73.00.2-7.44.85.03.86591.520.11.41.73.42.64.41.10.77754.523.62.511.86.90.22.91.32.821058.064.16.84.52.1-2.26.21.34.121740.666.15.76.43.0-2.513.53.24.032823.499.93.32.62.6-2.34.41.92.73.74.52.3-3.74.33.33.00.30.70.8-0.24.40.00.0-0.4-1.3-0.60.2-4.3-1.3-0.2-0.41.5-0.1-2.3-2.60.70.5Unemployment rate (a)11.77.46.38.17.67.37.19.58.17.85.511.05.66.05.65.45.17.03.54.23.53.66.88.917.015.813.910.74.83.92.6-0.16.87.25.13.82.62.70.13.29.43.50.91.60.93.22.5-3.11.5-15.0-8.6-8.6-5.1-7.4-10.9-9.9-5.8-0.2-0.72.9-0.5-3.9-3.2-2.5-0.8-0.6-4.5-7.3-7.2-3.0-1.3-2.1-1.5-3.3-6.9-6.6-2.728.837.136.743.344.847.046.5Private ConsumptionTable II.10.1:Main features of country forecast - LATVIA2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
       
 
 
11.  LITHUANIA 

Lithuania’s  economy  is  expected  to  continue  growing  at  1.7%  in  2022  and  2.6%  in  2023.  The 
relatively  small  exposure  of  Lithuanian  producers  to  Russia,  Belarus  and  Ukraine,  together  with 
the  support  provided  by  the  government,  should  limit  the  impact  of  the  war  on  the  economy. 
Measures  to  limit  energy  price  growth,  support  to  lower  income  households  and  increased 
spending to help people fleeing  Ukraine are expected to raise the general  government deficit in 
2022, before it declines in 2023. 

Geopolitical  tensions  and  strong  inflation 
expected to weigh on growth 

Although  Russia’s  invasion  of  Ukraine  and  the 
associated  geopolitical  tensions  will  have  a 
negative  impact  on  Lithuania’s  economy,  real 
GDP is still expected to grow by 1.7% in 2022. 
Exports to Russia, Belarus, Ukraine are sizeable, 
but mainly consisting of re-exported goods that 
generate  relatively  low  added  value  compared 
to  local  exports.  Weak  financial  ties  with  the 
aforementioned countries also limit the impact 
on  the  economy,  which  will,  however,  be 
affected  adversely  by  worsening  confidence  in 
all major sectors. 

Economic  growth  will  also  be  impacted  by 
surging prices that erode the purchasing power 
of  households.  Nevertheless, 
these  are 
positioned relatively well to  withstand the new 
shock  as 
in  recent  years  household  real 
disposable  income  has  grown  strongly  and the 
saving  rate  was  high  (in  2020  it  stood  at 
12.2%,  and  it  is  estimated  to  have  remained 
well  above  the  pre-pandemic  levels  in  2021, 
close  to  7%).  In  addition,  to  support  lower 
income households, the government is planning 
fiscal  measures,  which  are  estimated 
to 
increase household disposable income by 0.7% 
in 2022. 

On  the  other  hand,  after  falling  last  year, 
general  government  investment,  in  tandem 
with EU  support funds, is projected to increase 
in  2022,  mitigating  anticipated  weakening  of 
private sector investment. 

The  inflow  of  people  fleeing  from  Ukraine  will 
also contribute to economic  activity, leading to 
higher  private  consumption  and  government 
spending. While some of the displaced persons 
will  enter  the  labour  market,  especially  in 
sectors  where  companies  are  still  facing 
shortages  of  employees,  others  will  remain 

82 

inactive  or  unemployed,  pushing  up 
unemployment rate in both 2022 and 2023. 

the 

In  2023,  economic  growth 
is  forecast  to 
accelerate  to  2.6%,  below  the  average  growth 
rates  in  the  past  decade.  Higher-than-usual 
inflation  and  the  continued  uncertainty  due  to 
the  war  will  dampen  economic  activity.  The 
economy  will  also  be  affected  by  the  recent 
deterioration  in  trade  relations  with  China  and 
by lower growth opportunities for companies in 
the  transport  sector,  which  might  be  planning 
in  neighbouring 
investment 
more  sizeable 
countries. 

External factors drive inflation 

Consumer  prices  are  rising  much  faster  than 
previously  expected,  and  the  forecast  for 
inflation  in  2022  stands  at  12.5%.  Russia’s 
invasion of Ukraine has led to a surge in energy 
prices  that  the  government  will  only  partly  be 
able  to  alleviate  with  measures  aiming  at 
mitigating heating costs and capping electricity 
and  gas  prices.  The  surge  in  energy  costs  and 
growing  concerns  about  supply  shortages  are 
also  pushing  up  food  prices.  In  addition,  in 
2022  services  prices  are  projected  to  grow  at 
the highest pace since 2008, when they surged 
before 
crisis.  This 
development  is  driven  by  both  rising  domestic 

the  global 

financial 

-8-6-4-20246814151617181920212223Graph II.11.1: Lithuania -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
Euro Area Member States, Lithuania 

in  Lithuania 

demand  and  higher  input  costs.  In  2023, 
average  annual 
is 
inflation 
projected  to  decline  to  3.0%  on  the  back  of 
assumed lower energy prices, slower growth in 
other  costs,  in  particular  labour  costs,  and  a 
gradual  resolution  of  supply  disruptions  in 
various markets. 

General government deficit set to increase in 
2022 

After a significant decline in 2021, the general 
government  deficit  is  projected  to  increase  to 
4.6%  of  GDP  in  2022.  The  deficit  will  be 
impacted, 
in  particular,  by  government 
measures to curb the rapid rise in energy prices 
and  to  improve  the  financial  situation  of 
households.  Funds  for  the  accommodation, 
health care, education and other related needs 
of  people  fleeing  from  Ukraine  will  also  weigh 
on  the  public  sector  balance.  The  general 
government  deficit will  further be impacted by 
ongoing  COVID-19-related  measures,  although 
these will receive less funding than in 2021. 

The  general  government  deficit  is  projected  to 
decline to 2.3% of GDP in 2023 as measures to 
mitigate  the  impact  of  high  energy  prices 
cease.  Nevertheless,  the  measures  to  increase 
household  disposable  income  that  will  enter 
into  force  in  the  near  term  will  continue  to 
weigh on the public sector balance, while there 
are no significant offsetting  measures planned 
so  far.  The  forecast  also  incorporates  RRF-
financed expenditure, for a cumulative amount 
of 1.1% of GDP over the forecast horizon. 

At  the  beginning  of  2022,  Lithuania  redeemed 
a  sizeable  amount  of  government  bonds  for 
which  cash  reserves  had  been  accumulated 
already  in  2021.  Therefore,  the  debt-to-GDP 
ratio is projected to fall from 43.3% in 2021 to 
42.7% 
in  2022  despite  a  higher  general 
government  deficit.  In  2023,  the  debt-to-GDP 
ratio  is projected  to  increase  to  43.1%,  mainly 
due  to  the  need  to  balance  cash  flows  and 
prepare  for  a  bond  redemption  scheduled  for 
2024. 

83 

bn EURCurr. prices% GDP02-1720182019202020212022202355.4100.03.94.04.6-0.15.01.72.632.658.94.23.63.1-2.17.33.93.110.118.30.90.2-0.3-0.40.50.1-0.111.721.15.310.06.6-1.87.02.74.544.580.48.36.89.90.415.9-2.13.142.276.28.06.06.1-4.418.7-0.93.653.797.03.84.54.20.54.81.82.54.34.33.2-1.75.92.92.90.1-1.0-1.7-1.9-0.6-0.10.0-0.20.73.03.5-0.3-1.1-0.40.11.40.6-1.61.20.20.1Unemployment rate (a)10.56.26.38.57.17.27.27.47.910.67.311.48.76.23.45.26.35.77.37.13.72.80.13.512.27.32.92.63.03.52.71.56.57.43.02.62.52.21.14.612.53.00.6-1.01.31.5-6.4-3.50.1-7.9-6.3-4.8-0.8-5.2-7.8-8.3-4.20.33.57.32.0-1.8-2.1-2.50.50.5-7.3-1.0-4.6-2.3-0.7-0.8-1.0-7.0-0.9-4.0-1.529.333.735.946.644.342.743.1Private ConsumptionTable II.11.1:Main features of country forecast - LITHUANIA2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
       
 
 
12.  LUXEMBOURG 

Luxembourg’s  economy  is  projected  to  further  grow  over  the  forecast  horizon,  but  at  a  slower 
pace  of  2.2%  and  2.7%  in  2022  and  2023  compared  to  2021.  This  is  mainly  due  to  Russia’s 
invasion  of  Ukraine,  which  is  expected  to  weight  on  GDP  growth  through  indirect  channels  of 
higher  inflation,  6.8%  and  2.3%  in  2022  and  2023,  and  uncertainty  on  financial  markets.  The 
general government balance is projected to record a small deficit of 0.1% of GDP in 2022 and a 
small surplus of 0.1% in 2023, and the debt level is forecast to remain low. 

Slowdown after 2021 rebound 

The  economy  strongly  recovered  from  the 
COVID-19  crisis  in  2021,  registering  a  6.9% 
growth  rate  and  surpassing  its  pre-pandemic 
level.  External  and  domestic  demand,  which 
was  supported  by  fiscal  measures  and  the 
gradual  withdrawal  of  restrictions,  contributed 
to this growth. In 2022, real GDP is expected to 
grow  by  2.2%  -  a  more  moderate  increase 
mainly due to the Russian war against Ukraine 
and  its  global  impact.  Given  the  limited  direct 
trade  and  financial  flows  with  Ukraine  and 
Russia,  Luxembourg’s  economy  is  projected  to 
be  impacted  mostly  indirectly,  notably  through 
higher 
lower 
financial  market  volatility, 
confidence  and  slower  growth  of  trading 
partners.  

Although private consumption is expected to be 
affected by high energy and commodity prices, 
as  well  as  by  lower  consumer  confidence  due 
to  geopolitical  tensions,  it  is  projected  to 
continue  to  grow,  supported  by  accumulated 
savings,  a  dynamic  labour  market  and  the 
implementation 
support 
measures.  Those  aiming  at  maintaining 
citizens’  purchasing  power  include  an  energy 
tax credit, the reduction in the cost of fuel and 
increases 
an  agreement  on 
rent 
subsidies 

rents,  which 
freezes 

government 

and 

any 

of 

84 

tightening  of 

rise.  Investments are expected to increase at a 
slower  pace  in  2022  on  the  back  of  higher 
uncertainty  and 
financial 
conditions.  Imports  and  exports  of  goods  and 
services are expected to be negatively affected 
by  the  less  favourable  external  environment 
this  year.  The  GDP  growth  rate  is  forecast  to 
reach  2.7%  in  2023.  In  particular,  a  higher 
increase  of  investments  is  projected  supported 
by an improved business sentiment, and private 
consumption to remain on an increasing pace. 

including 

The  growth outlook is surrounded  by  downside 
risks, 
the 
geopolitical  fallout  and  its  impact  on  financial 
and  commodity  markets,  which  could  persist 
for a longer period. 

uncertainty 

about 

Positive prospects for the labour market  

The strong GDP growth of 2021 is expected to 
sustain  the  labour  market  dynamics  in  2022. 
Employment  is  forecast  to  increase  by  2.6% 
and 2.5% in 2022 and 2023 respectively, while 
unemployment  is  expected  to  decline  to  5.2% 
the 
and  5.1% 
vacancy  rate  and  the  share  of  long-term 
unemployment have been rising and are set to 
remain  high, 
skills 
mismatches.  The  withdrawal  of  the  short-time 
work  scheme  in  June  2022  represents  a 
downside risk to employment growth. 

respectively.  Nevertheless, 

reflecting  persistent 

Inflation on the rise 

Headline inflation (HICP) is expected to increase 
to  6.8%  in  2022  from  3.5%  in  2021,  mainly 
driven  by  high  energy  prices,  although  an 
acceleration of prices is also forecast for other 
components.  Soaring  commodity  prices  are 
projected  to  induce  an  increase  in  non-energy 
industrial  goods  and  food  inflation  in  2022.  In 
the  automatic  wage 
addition, 
indexations  in  October  2021  and  April  2022, 
the  prices of  services are  expected  to  increase 
as  well.    The  next  wage  indexation  is  planned 

following 

-6-4-20246814151617181920212223Graph II.12.1: Luxembourg -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
           
for  April  2023,  while  an  assumed  stabilisation 
of  energy  prices  is  set  to  ease  inflationary 
pressures,  with  HICP  estimated  to  increase  by 
2.3% in 2023.  

Challenges ahead for sound public finances  

In  2021,  the  general  government  balance 
recorded a surplus of 0.9% of GDP as revenues 
increased  strongly  on  the  back  of  economic 
growth, while expenditure growth slowed down. 
The  revenue  side  mainly  benefited  from  the 
strong  labour  market  leading  to  high  receipts 
from  personal 
social 
income 
contributions,  as  well  as from a  large  increase 
in  taxes  on  production  and  imports  following 
the high nominal growth rate. Expenditure grew 
more  moderately  as  higher  compensation  of 
employees  was  partially  neutralised  by  lower 
social  transfers,  due  to  the  phasing  out  of 
COVID-19  measures,  and  a  slight  decline  in 
public investments. 

tax  and 

in 

is  projected 

The  government  balance 
to 
decrease  to  a  small  deficit  of  0.1%  of  GDP  in 
2022.  Lower  GDP  growth  and  the  uncertain 
economic  outlook  result 
lower  revenue 
growth,  while  the  high  inflation  rate  pushes 
expenditure up. The revenue side is expected to 
still benefit from the strong performance of the 
labour  market 
in 
personal income taxes and social contributions, 
also supported by wage indexations in October 
2021  and  April  2022.  The  compensation  of 

leading  to  an 

increase 

Euro Area Member States, Luxembourg 

employees,  social  transfers  and  the  measures 
to mitigate the impact of high energy prices are 
leading  to  higher  expenditure  growth  in  2022. 
In  addition,  public  investment  is  planned  to 
increase again in 2022, notably to  support the 
green  and  digital  transition,  housing  and 
infrastructure. 

In  2023,  a  small  budget  surplus  of  0.1%  of 
GDP  is  forecast  due  to  lower  expenditure 
growth.  Revenue  growth  is  also  expected  to 
slow  down  in  the  context  of  the  lower  growth 
environment  and  in  the  light  of  the  planned 
new corporate taxation regulation in 2023.  As 
in the previous year, government expenditure is 
forecast to be driven by compensation of public 
employees,  again  supported  by  an  additional 
wage  indexation  scheduled  in  April  2023,  an 
increase  in  social  transfers  and  higher  public 
investments.   

The  debt  to  GDP  ratio  is  on  a  slow  upward 
trend,  because  the  nominal  GDP  growth  is 
offset  by  new  planned  debt  to  finance  the 
deficit  of  the  central  government,  as  the 
surplus  of  the  social  security  sector  cannot  be 
used for this purpose. In 2021, the debt to GDP 
ratio was 24.4% and it is expected to increase 
to 24.7% in 2022 and 25.1% in 2023. 

85 

mio EURCurr. prices% GDP02-1720182019202020212022202373313.5100.02.72.03.3-1.86.92.22.721674.629.62.52.72.5-6.97.43.72.912368.516.92.74.73.97.74.73.32.012673.517.32.6-6.29.8-4.612.31.32.1155510.5212.14.13.65.81.39.73.83.1129567.3176.74.43.26.91.610.44.33.152669.971.81.30.9-3.44.88.72.22.11.80.53.1-1.85.21.91.60.1-0.20.10.2-0.30.00.00.81.70.2-0.22.00.41.12.83.63.51.93.12.62.5Unemployment rate (a)5.05.65.66.85.35.25.12.72.81.90.45.14.83.62.74.52.14.11.45.13.4:::::::2.91.70.64.36.84.02.12.22.01.60.03.56.82.30.8-0.7-0.23.6-1.5-3.00.1-1.13.53.34.14.32.93.14.73.0-2.43.77.55.95.51.13.02.3-3.40.9-0.10.11.83.22.2-1.60.90.10.415.120.822.324.824.424.725.1Private ConsumptionTable II.12.1:Main features of country forecast - LUXEMBOURG2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
                
 
 
13.  MALTA 

The economy of Malta is set to continue expanding, by 4.2% in 2022 and by 4.0% in 2023 while 
withstanding the impact of the increase in by commodity prices and Russian invasion of Ukraine. 
The  main  factors  supporting  growth  are  the  robust  domestic  demand  and  growth  in  exports  of 
services, contributed by strong recovery in tourism. The general government balance is projected 
to remain in deficit, however decreasing in 2022 and 2023, following winding-down of pandemic-
related policy support on the background of economic growth. 

Malta 
withstanding the current headwinds 

remains 

growth 

on 

a 

path 

Labour market shortages persist 

The  pressure  from  the  COVID-19  pandemic 
related  restrictions  subsided  in  2021,  creating 
conditions for a very strong economic recovery 
of  9.4%,  thanks  to  improved  business  and 
consumer  sentiment,  faster  than  expected 
rebound  of  international  tourism  and  a  strong 
growth in investment and services exports.  

In  2022,  affected  by  disruptionsrelated  to  the 
Russian invasion of Ukraine, real GDP growth is 
forecast  to  reach  4.2%,  which  is  substantially 
less  than  expected  in  winter,  although  Malta 
has  very  low  direct  exposure  to  trade  with 
Russia and Ukraine. Growth in 2022 is set to be 
driven  by  domestic  consumption,  investment, 
and  a  small  positive  contribution  from  net 
exports.  Export  of  tourism  services  is  expected 
to  continue  gaining  ground  on  the  back  of 
Robust 
pandemic-restrictions. 
easing 
government expenditure, in particular via public 
investment,  will  continue 
the 
economy. 
is  forecast  to 
decrease  to  a  still  strong  4.0%,  reflecting  a 
general  slowdown 
in  performance  among 
trading partners. 

In  2023,  growth 

to  support 

body 

With  both  exports  and  imports  growing,  the 
current  account  balance  is  expected  to  remain 
positive.  The  limited  downside  risks  deriving 
from  the  June  2021  decision  of  the  Financial 
Action  Task  Force  (the  international  standard-
anti-money 
setting 
laundering/countering 
of 
terrorism)  to  include  Malta  in  the  list  of 
jurisdictions  under  increased  monitoring  have 
further  receded  following  the  FATF 
initial 
determination,  in  February  2022,  that  Malta 
has  substantially  completed  its  action  plan.  A 
final decision is expected in June 2022. 

financing 

on 
the 

86 

Malta  was  able  to  cushion  the  impact  of  the 
pandemic on the labour market thanks to fiscal 
support.  Employment  is  estimated  to  have 
grown  by  1.6%  in  2021,  while  the  wage 
support  measures 
place. 
Employment is expected to continue to increase 
forecast  horizon.  This  positive 
over 
development in the labour market is congruent 
with  labour  shortages  being  reported  by  firms. 
Malta’s unemployment rate, at 3.5% in 2021, is 
set to remain broadly stable in 2022 and 2023. 

remained 

the 

in 

Global price pressures lead to a strong uptick 
in inflation 

HICP  inflation  remained  low  in  2021  at  0.7%, 
thanks  to  energy  prices  being  kept  low  by 
government intervention and hedging contracts 
for  gas.  Going  forward,  while  Malta’s  economy 
the  share  of 
is  highly  energy-intensive, 
household  expenditures  on  energy 
low 
compared  to  other  Member  States  and  the 
authorities  have  expressed  a  commitment  to 
continue  to  limit  energy  prices  growth.  The 
higher  inflation  in  the  first  quarter  of  2022 
shows  that  the  pressure  from 
increasing 
international  energy  and  commodity  prices  is 
starting to affect Malta via transport costs and 
imported  goods.  As  a  result,  inflation  is  set  to 

is 

-12-8-4048121614151617181920212223Graph II.13.1: Malta -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
     
rise  to  4.5%  in  2022.  As  these  factors  are 
expected  to  persist  into  2023,  inflation  is 
expected to remain elevated at 2.6%. 

The  government  deficit  is  set  to  gradually 
decrease while remaining elevated 

to 

related 

The  government  deficit  is  estimated  to  have 
decreased  to  8.0%  of  GDP  in  2021.  This  still 
high  deficit  level  is  mainly  explained  by  public 
pandemic-related 
expenditure 
measures  which  were  maintained  in  2021, 
including  the  wage  support  scheme,  the  utility 
for  businesses,  and 
and 
healthcare-related 
expenditures. 
Pandemic-related  economic  support  measures 
are  expected  to  be  phased  out  in  2022  and 
2023,  while  several  measures  in  response  to 
the high energy prices were recently introduced. 

rent  subsidies 

Euro Area Member States, Malta 

The tax revenues resumed growth in 2021 and 
are  expected  to  continue  to  increase  in  2022 
and  2023,  following  the  positive  economic 
growth  dynamics.  The  revenues  from  social 
contributions  also  increased  in  2021  and  are 
increasing  over  the 
expected  to  continue 
the  good 
forecast  horizon,  supported  by 
performance of the labour market. 

The deficit is projected to decrease to 5.6% of 
GDP in 2022 and further to 4.6% in 2023. The 
government  debt-to-GDP  ratio  is  projected  to 
increase  marginally  to  58.5%  in  2022  and 
reach  59.5%  in  2023  as  the  negative  primary 
balance  is  only  partially  compensated  by  the 
nominal GDP growth. 

87 

bn EURCurr. prices% GDP02-1720182019202020212022202314.5100.04.26.05.9-8.39.44.24.06.242.82.48.94.6-10.26.23.83.43.020.62.112.313.115.86.19.01.43.222.35.45.58.4-7.619.32.54.921.6148.46.8-0.57.0-5.68.25.54.719.6135.06.00.28.0-2.27.66.04.313.491.93.49.25.8-9.910.33.64.02.97.05.9-3.68.04.02.90.10.10.10.6-0.40.00.01.3-1.0-0.1-5.31.80.11.12.66.05.72.81.62.12.0Unemployment rate (a)6.33.73.64.43.53.63.63.43.93.8-0.75.53.82.91.93.93.611.4-2.11.81.0:::::::2.42.22.41.51.72.82.62.01.71.50.80.74.52.6-0.13.2-0.1-0.53.4-2.7-0.8-17.2-11.8-11.9-10.5-16.6-18.9-19.5-1.310.77.61.44.11.91.9-2.62.10.6-9.5-8.0-5.6-4.6-0.8-0.3-1.7-6.2-7.4-5.2-4.363.543.740.753.457.058.559.5Private ConsumptionTable II.13.1:Main features of country forecast - MALTA2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
     
 
 
14.  THE NETHERLANDS 

While growth momentum carried over from 2021 provided a strong starting point for 2022, the 
deterioration  of  households’  real  disposable  income  due  to  strong  price  pressures  and  the 
uncertainty created by the war in Ukraine are expected to subdue further economic expansion. In 
2023,  government  spending  and  investment  growth  is  expected  to  pick-up  while  net  trade  is 
forecast  to  contribute  negatively  to  growth.  The  government  deficit  is  projected  to  increase 
marginally in 2022 due to spending plans adopted by the new government and measures aimed 
at relieving the energy price pressure on consumers, before decreasing again in 2023.  

A strong basis but increasing headwinds 

recovery 

The  Dutch  economy  grew  by  5.0%  in  2021 
in  private 
driven  by  a  strong 
consumption  and  a  significant  contribution 
from net trade. Early 2022 economic sentiment 
indicators  remained  strong,  despite  the  strict 
COVID-related  restrictions  that  were  still  in 
place in December and January.  

growth  are  projected  to  pick  up  in  2023.  The 
contribution  from  net  trade  is  set  to  turn 
negative  in  2023  as  import  growth  increases 
whereas  export  growth  slows.  Consumption 
growth is expected to be modest as geopolitical 
tensions are assumed to persist while high core 
inflation  continues  to  weigh  on  disposable 
income.  Annual  growth  in  2023  is  forecast  at 
1.6%.  

causing 

Russia’s  invasion  of  Ukraine  has,  however, 
consumer 
increased  uncertainty, 
confidence  to  drop  sharply.  Moreover,  the  war 
has  further  increased  commodity  prices,  which 
come  on  top  of  the  already  high  inflation 
related  to  supply  chain  pressures  and  new 
lockdowns  in  China.  Inflation  is  expected  to 
erode  households’  purchasing  power,  subduing 
the pace of the recovery in private consumption 
that  followed  the  abolishment  of  the  COVID-
related  restrictions  at  end-January.  Business 
investment 
likely  to  be  adversely 
affected during the remainder of 2022 as firms 
are  coping  with  the  increased  uncertainty, 
labour  shortages  and  the  persistent  supply 
chain bottlenecks.  

is  also 

After  a  strong  contribution  from  net  trade  in 
2021, export and import growth are forecast to 
be more in balance in 2022. Besides a reliance 
on oil and gas imports from Russia, direct trade 
links  with  Russia  are  relatively  limited  and  the 
impact on the contribution of bilateral net trade 
to GDP growth is thus expected to be marginal. 
side,  COVID-related 
On 
the  government 
consumption  expenditure 
to 
is  expected 
decrease  thereby  further  subduing  growth, 
especially  in  the  first  half  of  the  year.  Overall 
and 
largely  thanks  to  the  strong  growth 
momentum carry-over from 2021, GDP growth 
for 2022 is forecast at 3.3%. 

Business investment and government spending 

88 

A tight labour market  

rebound 

in  economic  activity 

Labour market tightening continued throughout 
2021,  with  the  number  of  vacancies  well 
exceeding  the  number  of  unemployed  and  a 
broad  range  of  sectors  experiencing  labour 
shortages.  The  tight  labour  market  is  due  to  a 
strong 
in 
combination  with 
large  packages  of 
the 
economic  support  measures  that  were  still  in 
place during most of 2021. The unemployment 
rate  is  expected  to  reach  4.0%  in  2022,  down 
from  4.2%  in  2021.  With  the  abolishment  of 
COVID-related  support  measures,  bankruptcies 
are set to gradually pick up over the course of 
2022  from  their  historically  low  levels.  The 
normalisation  of  labour  market  dynamics  is 
forecast  to 
in 
unemployment  to  4.2%  in  2023.  Wage  growth 
has  been  on  a  clear  upward  trend  since  mid-

lead  to  a  slight  pick-up 

-6-4-20246814151617181920212223Graph II.14.1:The Netherlands -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
  
 
 
Euro Area Member States, The Netherlands 

related expenditure decreased.  

In  2022,  the  deficit  is  forecast  to  increase  to 
2.7%  of  GDP  driven  by  of 
the  new 
government’s additional spending plans related 
to  the  green  transition,  excessive  nitrogen 
depositions,  education  and  housing  supply, 
among  others.  For  2022,  the  government  also 
announced  additional  tax  cuts  to  alleviate  the 
impact  of  surging  energy  prices  on  both 
households and companies.  

Some COVID-related support measures will still 
be in place in 2022, but it will be phased out in  
2023. So far, measure taken in response to the 
high-energy prices have been adopted only for 
2022.  The  government  deficit  is  forecast  to 
drop to 2.1% in 2023.  

Government debt is projected to decrease from 
52.1%  of  GDP  in  2021  to  51.4%  in  2022  and 
50.9% in  2023.  In  the  absence  of  an  officially 
submitted national RRP at the time of the cut-
off  date,  this  forecast  assumes  that  it  will  be 
submitted  in  summer  2022  and  that  the  first 
cash disbursement of the RRF could be made in 
2023. 

2021,  although  it  remains  below  its  pre-
pandemic pace. Moreover, rapid price growth in 
2022  is  expected  to  outpace  wage  growth 
leading to a decline in real wages. 

Surging inflation  

The  war  in  Ukraine  has  resulted  in  additional 
price  pressures,  with  year-on-year  HICP 
inflation  reaching  11.7%  in  March.  Gas,  oil, 
wheat  and  other  raw  material  price  increases 
come on top of already very high inflation rates 
recorded at the beginning of the year. Gas and 
oil price increases are affecting inflation in the 
Netherlands  particularly  strongly  due  to  their 
high  share  in  the  Dutch  energy  mix.  Energy 
prices  are  expected  to  peak  in  the  second 
quarter  of  2022  and 
to  stay  elevated 
throughout  the  year.  At  the  same  time,  core 
is  picking  up  as  producers  and 
inflation 
businesses  pass  through  raw  material  price 
increases to their customers. Annual inflation in 
2022  is  forecast  at  7.4%.  For  2023,  energy 
prices  are  expected  to  show  a  moderate 
decline,  which  would  bring  annual  inflation 
down to 2.7%.   

Smaller deficit after the end of fiscal support 
measures 

In 2021, the general government deficit fell to 
2.5%  of  GDP,  as  revenues  increased  on  the 
back  of  the  economic  recovery  while  COVID-

89 

bn EURCurr. prices% GDP02-17201820192020202120222023860.7100.01.32.42.0-3.85.03.31.6357.741.60.42.20.9-6.63.54.61.9225.726.21.81.72.81.05.51.81.8182.521.21.03.66.2-4.13.52.92.9719.683.63.84.32.0-4.86.63.93.5624.872.63.64.73.2-5.55.14.14.3854.999.31.32.81.2-5.96.23.91.60.82.12.3-3.53.73.01.90.00.10.3-0.3-0.30.00.00.40.2-0.70.01.70.3-0.40.53.02.20.61.82.01.1Unemployment rate (a)6.14.94.44.94.24.04.22.21.72.83.52.13.13.71.52.33.08.3-1.01.93.213.416.317.724.023.419.318.31.42.43.02.32.43.83.31.61.62.71.12.87.42.70.1-0.20.91.5-2.1-3.20.88.69.37.48.18.16.05.87.310.89.47.09.58.78.7-2.01.41.7-3.7-2.5-2.7-2.1-0.20.70.7-1.3-2.0-3.2-2.556.552.448.554.352.151.450.9Private ConsumptionTable II.14.1:Main features of country forecast - NETHERLANDS2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
     
 
 
15.  AUSTRIA 

Economic activity recovered in 2021 on the back of strong pent-up demand and the relaxation of 
sanitary  containment  measures,  and  is  set  to  expand  by  3.9%  in  2022  and  1.9%  in  2023.. 
However,  Russia’s  invasion  in  Ukraine  and  associated  high  energy  prices,  as  well  as  disrupted 
supply chains, are set to slow the upswing. Inflation is forecast to peak at 6.0% in 2022, and will 
only  gradually  ease  to  3.0%  in  2023.  The  general  government  deficit  is  projected  to  decline  to 
3.1% of GDP in 2022 on  the back of the positive growth  outlook and the gradual phase out of 
support measures, and narrow further to 1.5% of GDP in 2023.. 

Economic rebound continues in 2022 

the 

following 

After  reaching  its  pre-pandemic  level  in  the 
third  quarter  of  2021,  economic  activity 
declined  again  by  1.5%  quarter-on-quarter  in 
2021-Q4, 
reintroduction  of 
containment  measures  at  the  end  of  the  year. 
In  2021  as  a  whole,  real  GDP  increased  by 
4.5%. In 2022, real GDP is expected to increase 
by 3.9%, on the back of a strong rebound in the 
first  quarter of  this year after the  phasing  out 
of  containment  measures  (2.5%  quarter-on-
quarter).  The  economic  expansion  in  2022 
continues  to  be  driven  by  pent-up  private 
consumption and the revival of tourism and the 
services sector. The Russian invasion of Ukraine 
is a headwind for the Austrian export industry, 
while higher prices put pressure on consumers’ 
purchasing  power.    Overall,  this  increases  the 
uncertainty of the economic outlook. 

and  the  implementation  of  the  Austrian  RRP. 
This will partly be offset by the impact of high 
inflation  on  real  disposable  income.  Business 
investment  is  also  set  to  continue  supporting 
the expansion. Overall, real GDP is expected to 
grow  by  1.9%  in  2023.  Downside  risks  to  the 
projections  are  linked  to  Austria’s  dependence 
supply 
on  Russian  gas  and  prolonged 
bottlenecks. 

Labour markets remain robust 

to 

the  ongoing  expansion, 

Thanks 
the 
unemployment  rate  is  forecast  to  drop  to  pre-
crisis  levels,  reaching  5.0%  in  2022  and  4.8% 
in  2023.  After  rebounding  by  2.1%  in  2021, 
employment  is  expected  to  expand  by  2.9%  in 
2022 and 0.9% in 2023, in line with the revival 
of  the  labour  intensive  tourism  and  services 
sectors and the projected economic expansion.  

Energy prices drive inflation 

Energy  prices  increased  significantly  following 
the  Russian  invasion  of  Ukraine,  from  an 
already elevated level. In 2022, energy inflation 
is expected to be even higher in the first half of 
the year, and is projected to slow down only as 
from  the  third  quarter  of  2022.  Overall,  after 
reaching already 2.9% in 2021, HICP inflation is 
expected  to  peak  at  6.0%  in  2022  before 
gradually decreasing to 3.0% in 2023.  

Public  finances  continue  to  improve  in  line 
with positive growth prospects 

Public  finances  have  improved  visibly  in  2021 
on  the  back  of  the  economic  recovery  and 
positive 
labour  market  developments.  The 
general government balance  declined to  -5.9% 
of  GDP  in  2021.  This  is  largely  the  result  of 
strong  growth  in  tax  revenues  and  social 
contributions,  which  exceeded  pre-crisis  levels. 
Public expenditures  still continued to rise  more 

Continued expansion in 2023  

is  expected 

The  economic  expansion 
to 
continue  in  2023,  mainly  driven  by  domestic 
demand.  Both  pent-up  demand  and 
the 
unleashing  of  accumulated 
savings  are 
projected  to  boost  private  consumption  over 
the  forecast  horizon,  further  supported  by  the 
tax relief provided by the eco-social tax reform 

90 

-8-6-4-2024614151617181920212223Graph II.15.1: Austria -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
     
Euro Area Member States, Austria 

strongly  than  in  normal  times  as  a  result  of 
continued  crisis  management  measures,  which 
prevented the deficit from decreasing further. 

revenues  are  set  to  continue  to  grow  robustly 
while expenditures are set to decrease further.  

strong 

private 

consumption 

In  2022,  the  general  government  deficit  is 
expected to decline to 3.1% of GDP. On the one 
and 
hand, 
employment fuel consumption-based taxes and 
social  contributions.  On  the  other  hand,  public 
expenditures  are  set  to  grow  at  a  much  lower 
pace,  due  to  the  phasing  out  of  remaining 
pandemic  support  measures.  In  2023,  the 
general  government  deficit  is  expected  to 
further decrease to 1.5% of GDP as a result of 
the continued economic expansion. Government  

Driven by the expected favourable development 
of 
the  general  government  balance  and 
relatively high nominal GDP growth, public debt 
is set to continue declining in the coming years. 
Having  declined  to  82.8%  of  GDP  in  2021, 
public  debt  is  projected  to  further  decrease  to 
80.0%  and  77.5%  of  GDP  in  2022  and  2023, 
respectively. 

91 

bn EURCurr. prices% GDP02-17201820192020202120222023403.4100.01.52.51.5-6.74.53.91.9201.249.91.21.10.7-8.53.34.12.386.621.51.31.21.5-0.56.7-1.20.7103.125.61.24.44.8-5.24.03.72.3225.755.93.55.13.4-10.812.76.33.8222.055.03.25.32.0-9.414.54.63.8401.299.51.52.52.1-6.54.03.81.81.21.81.8-5.84.12.81.90.10.5-1.20.10.50.10.00.20.10.9-1.1-0.51.00.01.01.71.1-1.62.12.90.9Unemployment rate (a)5.55.24.86.06.25.04.82.22.92.81.73.41.52.61.72.12.57.31.00.51.614.613.113.919.715.611.610.71.81.81.62.31.83.43.21.92.11.51.42.86.03.0-0.1-0.6-0.91.2-3.2-3.00.70.10.31.00.80.1-1.4-1.12.41.02.21.9-0.5-1.0-0.8-2.40.20.6-8.0-5.9-3.1-1.5-0.7-0.8-0.6-4.8-4.4-3.0-1.675.474.170.683.382.880.077.5Private ConsumptionTable II.15.1:Main features of country forecast - AUSTRIA2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Note : Contributions to GDP growth may not add up due to statistical discrepancies.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
                              
 
 
16.  PORTUGAL 

Portugal’s economy grew by 4.9% in 2021, recovering slightly more than half of the level lost in 
2020.  The  growth  outlook  remains  favourable  despite  challenges  related  to  commodity  prices, 
global supply chains, and higher uncertainty in external demand. The public deficit is set to ease 
to 1.9% of GDP in 2022 and 1% in 2023, on the back of economic growth and the inflow of EU 
funds, amid a wind-down of crisis-related measures and strong momentum in public investment. 

GDP  keeps  growing  amid  higher  external 
risks 

Portugal’s  GDP  grew  by  4.9%  in  2021  after  a 
steep  contraction  of  8.4%  in  2020  caused  by 
the  outbreak  of  the  COVID-19  pandemic. 
Investment and exports of goods rebounded to 
above  pre-pandemic  levels  in  2021.  However, 
private  consumption  recovered  at  a  somewhat 
slower pace as contact-intensive services faced 
continuous  restrictions. 
In  quarterly  terms, 
growth  peaked  in  the  second  quarter  of  2021 
and moderated afterwards as pent-up demand 
gradually  waned  and  services  faced  a  new 
round  of  restrictions  towards  the  end  of  the 
year. Growth picked up again to 2.6% (q-o-q) in 
the  first  quarter  of  2022  as  most  of  the 
containment  measures  were  lifted  in  mid-
January. 

After  the  strong  start  of  the  year,  Portugal’s 
GDP is projected to rise by 5.8% in 2022 as the 
services  sector,  particularly  foreign  tourism,  is 
set  to  rebound  strongly  from  a  low  base. 
Economic  growth  is  expected  to  moderate  to 
2.7%  in  2023.  Domestic  demand  is  set  to 
contribute substantially to growth in both years 
with  investments  rising  faster  than  private 
ongoing 
consumption 
implementation of the RRP. The external sector 
is forecast to have a positive net contribution to 
growth  in  2022,  reflecting  the  recovery  in 

thanks 

the 

to 

92 

tourism,  followed  by  a  broadly  neutral  impact 
in 2023.  However, the  current-account  balance 
is  expected  to  worsen  in  2022,  due  to  high 
prices of energy imports, and to only improve in 
2023 when energy prices are assumed to move 
downwards to some extent. 

Risks to the growth outlook have moved to the 
downside  as  a  result  of  Russia’s  war  of 
aggression  against  Ukraine.  In  the  light  of 
Portugal’s  low  direct  exposure  to  the  affected 
region, 
indirect, 
stemming  from  commodity  prices,  security  of 
supplies and uncertainty in global demand. 

risks  are  mostly 

these 

Unemployment drops to 20-year low 

Helped  by  continued  government  support 
schemes  and  the  economic  recovery,  the 
unemployment  rate  dropped  to  6.6%  in  2021. 
The  rate improved further to 5.6% in February 
2022,  reaching  a  20-year  low.  In  addition,  the 
employment rate  rose to a  historic high at the 
end  of  2021  and  early  2022.  However,  hours 
worked 
their  pre-
pandemic level. As job support schemes are set 
to  expire  in  the  second  quarter  of  2022,  the 
unemployment rate is projected to improve at a 
much  slower  pace  over  the  forecast  horizon. 
The  rebound  in  foreign  tourism  is  set  to  more 
visibly impact hours worked than employment. 

remained  well  below 

Consumer price inflation (HICP) averaged 0.9% 
in  2021  amid  a  substantial  increase  towards 
the  end  of  the  year.  In  quarterly  terms,  HICP 
inflation  reached  2.4%  (y-o-y)  in  the  last 
quarter of 2021 and rose further to 4.4% (y-o-
y)  in  the  first  quarter  of  2022  as  prices  of 
including 
energy  and  other  commodities, 
metals,  construction  materials  and  agricultural 
products,  kept  growing.  Inflation  is  forecast  to 
peak  in  the  second  quarter  of  2022  and  to 
gradually moderate thereafter at year-average 
rates of 4.4% in 2022 and 1.9% in 2023. Core 
is  projected  at  3.7%  and  2.2%, 
inflation 

-10-8-6-4-2024614151617181920212223Graph II.16.1: Portugal -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
  
respectively,  moving  at  a  somewhat  slower 
pace than the expected average wage growth. 

Public  finances  benefit  from  the  economic 
recovery 

the 

from 

The  budget  balance  reached  a  deficit  of  2.8% 
of  GDP  in  2021,  below  the  5.8%  observed  in 
2020.  Public 
the  deficit 
revenue  drove 
reduction,  thanks  to  the  stronger  intake  of  tax 
and  social  contributions’  revenue  (by  2.5%  of 
GDP)  and  the  higher  inflow  of  EU  funds  (by 
more  than  1%  of  GDP),  compared  to  2020.  In 
particular, 
taxes  on 
revenue 
production  and  imports  grew  buoyantly  (by 
10.6% y-o-y), on the back of stronger domestic 
demand.  Public  finances  also  benefited  from 
one-off revenue linked to the repayment of the 
pre-paid  margin  of  the  European  Financial 
Stability  Facility  financial  assistance  loan  (of 
0.5%  of  GDP).  However,  these  favourable 
developments  were  partly  offset  by  continued 
growth 
in  public  expenditure,  where  pre-
current 
pandemic  upward  pressures  on 
spending, especially  on  social  benefits  and  the 
public wage bill, were amplified by the need to 
persist  in  responding  to  the  pandemic.  At  the 
same  time,  there  was  revived  momentum  in 
public  investment  (by  19%  y-o-y),  after  a 
protracted period of subdued growth. 

Public  finances  are  projected  to  continue  to 
improve over the forecast horizon, supported by 

Euro Area Member States, Portugal 

is  also 

broad-based  economic  growth.  Against  that 
background,  the  deficit  is  projected  to  narrow 
to 1.9% of GDP in 2022, and to 1% in 2023. On 
the  one  hand,  the  gradual  wind-down  of  the 
temporary  measures  taken  in  response  to  the 
pandemic is expected to contribute to roll back 
the  deficit,  despite  possibly  lasting  effects  on 
health-related  intermediate  consumption  and 
the  public  wage  bill.  On  the  other  hand, 
Portugal 
implementing  additional 
measures to mitigate the impact of high energy 
prices in 2022, which include a combination of 
tax  breaks  and  new  subsidies  to  firms  and 
households.  The  forecast  also  incorporates 
expenditure  financed  by  RRF  grants,  which  are 
expected to gradually increase to 1.3% of GDP 
in 2022, and to 1.6% in 2023. Prompted by the 
ongoing  implementation  of  the  RRP,  public 
investment  is  projected  to  accelerate  to  above 
3%  of  GDP  in  2022,  and  to  remain  at  a 
historically high level in 2023. 

Reflecting  the  improving  economic  conditions 
and  a  reduction  of  the  cash  buffer,  the  public 
debt-to-GDP ratio declined to 127.4% in 2021, 
after  its  peak  of  135.2%  in  2020.  Driven  by 
favourable 
rate 
differentials,  it  is  set  to  remain  on  a  steadily 
declining  path  over  the  forecast  horizon, 
moderating to 119.9% of GDP in 2022, and to 
115.3%  in  2023,  when  it  would  therefore  fall 
below its pre-pandemic level. 

growth-interest 

nominal 

93 

bn EURCurr. prices% GDP02-17201820192020202120222023211.3100.00.42.82.7-8.44.95.82.7135.964.30.62.63.3-7.14.54.62.340.119.00.20.62.10.44.11.21.341.819.8-2.06.25.4-2.76.46.55.288.842.04.34.14.1-18.613.112.34.195.145.02.65.04.9-12.112.98.64.1208.898.80.42.72.5-7.55.35.22.80.02.83.4-5.04.94.52.80.00.3-0.3-0.60.20.00.00.4-0.3-0.4-2.9-0.21.3-0.1-0.42.30.8-1.92.11.00.9Unemployment rate (a)11.17.26.77.06.65.75.51.73.94.82.03.84.22.60.93.42.89.31.0-0.60.89.16.87.212.610.97.77.21.91.81.71.90.72.93.11.81.20.3-0.10.94.41.90.3-0.80.41.60.8-2.62.5-9.0-7.8-7.8-6.4-7.4-9.9-9.1-5.60.30.1-1.2-1.1-1.7-0.7-5.6-0.30.1-5.8-2.8-1.9-1.0-1.9-1.0-1.2-1.8-1.3-1.9-1.598.1121.5116.6135.2127.4119.9115.3Private ConsumptionTable II.16.1:Main features of country forecast - PORTUGAL2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
             
 
 
17.  SLOVENIA 

Slovenia’s  economy  expanded  briskly  in  2021,  especially  in  the  final  quarter  of  the  year. 
Benefitting from the strong carry over from 2021, growth is expected to continue in 2022-23 at 
3.7%  and  3.1%  respectively,  despite  the  increasing  uncertainty  arising  from  Russia’s  war  of 
aggression  against  Ukraine,  lower  exports,  price  increases  and  supply  chain  difficulties.  Public 
finances  are  forecast  to  improve  with  deficit  decreasing  from  5.2%  in  2021  to  3.4%  by  2023, 
although  high  current  expenditure  is  projected  to  hinder  a  stronger  improvement  in  public 
finances. 

Robust recovery in 2021 

GDP grew by 8.1% in 2021, significantly faster 
than  the  euro  area  average  growth.  Notably, 
Slovenia  recorded  the  strongest  growth  in  the 
EU  in  the  final  quarter  of  2021,  providing  a 
very  strong  carry-over  effect  for  growth  in 
2022.  Growth  was  mostly  driven  by  private 
consumption 
investment, 
also 
by 
particularly 
in  machinery  and  equipment. 
Imports  grew  significantly  faster  than  exports, 
leading  to  a  negative  contribution  of  net 
exports to growth. Employment fully recovered 
the losses during 2020.  

but 

Continued growth over 2022 and 2023 

to 

high-frequency 

According 
indicators, 
Slovenia’s  economy  continued  to  grow  in  the 
first  quarter  of  2022.  GDP  is  expected  to 
continue expanding, by some 3.7% and 3.1% in 
2022-23  respectively  despite  the  negative 
effects  arising  from  price  increases,  supply 
bottlenecks  and  the  fall  of  confidence  in  light 
of  Russia’s  war  of  aggression  against  Ukraine. 
Despite  the  erosion  of  real  incomes  driven  by 
inflation,  private  consumption  is  projected  to 
expand  on  the  back  of  continued  employment 
growth,  higher  disposable  income,  the  recently 
adopted  tax  reform  and  the  utilisation  of 
accumulated  savings.  As  pandemic-related 
fiscal  measures  expire,  public  consumption 
growth  is  forecast  to  moderate  in  2022  after 
registering  high  growth  over  the  2020–21 
period.  

Price  and  demand  pressures  and  increased 
uncertainty  are  expected 
to  have  strong 
negative effects on private investment. This will 
be  somewhat  offset  by  a  strong  public 
the  utilisation  of 
to 
investment 
significant  residual  structural  funds  and  RRF-
financed  investments.  With  a  lower  projected  
import volume growth, net exports are expected 

thanks 

94 

to  have  positive  effects  on  growth  over  the 
2022-23  period  and  the  current  account 
surplus  is  projected  to  narrow  significantly  in 
2022 due to the worsening terms of trade.  

Risks  are  tilted  to  the  downside,  as  the 
uncertainty remains very high. Given Slovenia’s 
high  share  of  exports,  growth  could  be 
hampered  by  lower  demand  in  its  markets.  In 
the  context  of  high  uncertainty  and  inflation, 
increase 
consumers  might  be 
lower 
savings 
precautionary 
consumption  along  with 
in 
employment.  

inclined  to 
leading 

the  decrease 

to 

Labour market holding up 

of 

the 

and 

number 

Employment  grew  by  1.4% 
in  2021.  By 
February  2022,  unemployment  had  reached 
4.1% 
registered 
unemployed continued to fall while the number 
of  job  openings  continued  to  increase.  It  is 
remain 
that  unemployment  will 
projected 
to  2021, 
unchanged  at  4.8%  compared 
implying  that  monthly  rates  will 
increase 
somewhat through the year as uncertainty and 
high  input  prices  are  likely  to  force  employers 
to limit new hiring.  

-6-4-202468101214151617181920212223Graph II.17.1: Slovenia -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
                 
Although  this  was  softened  by  the  cap  of  fuel 
prices  implemented  by  the  government  in 
March, inflation accelerated in the first quarter 
of  2022  to  6.3%.  It  is  expected  that  the 
inflation  will  average  6.1%  for  2022  and  drop 
to 3.3% in 2023.  

Public  finances  to  improve  slowly  despite 
high current expenditure 

The  general  government  deficit  declined  to 
5.2%  of  GDP  in  2021,  mainly  due  to  the 
rebound in economic activity and the expiration 
of  most  of  the  measures  adopted  to  mitigate 
the  economic  and  social  impact  of  the  COVID-
19 pandemic.  

to 

the 

increase 

In 2022, the deficit is projected to decrease to 
4.3%  of  GDP.  On  the  revenue  side,  indirect 
taxes  are  projected  to  increase  by  8.8%  in 
2022  due 
in  private 
consumption.  Current  taxes  on  income  and 
wealth  are  forecast  to  decrease  by  1.7%  as  a 
result  of  the  permanent  tax  cuts  adopted  by 
the 
compensating 
measures.  Revenues 
from  social  security 
contributions  are  expected  to  keep  growing  on 
the  back  of  the  increases  in  nominal  wages in 
the private sector.  

government  without 

On  the  expenditure  side,  even  if  most  of  the 
impact  of  the 
measures  to  mitigate  the 
pandemic  are  phased  out  this  year,  nominal 

Euro Area Member States, Slovenia 

current  expenditure  in  2022  is  projected  to 
increase  by  0.5%.  This  is  partly  due  to  the 
newly  adopted  measures  in  response  to  the 
high  energy  prices  and  the  expenditure  to 
support  refugees  fleeing  Ukraine.  Despite  past 
under-execution compared to the budget, public 
investment is still expected to grow strongly in 
2022 at a similar pace compared to 2021. 

In  2023,  the  general  government  deficit  is 
expected  to  decline  to  3.4%  of  GDP.  However, 
this  projection  is  subject  to  a  number  of  risks: 
higher current expenditure and the prolongation 
of  a  number  of  temporary  measures  as 
uncertainty  heightens; 
indirect 
measures  to  shield  household  and  firms  being 
eventually  borne  by  the  budget  (e.g.,  price  cap 
on  fuel  prices  and  temporary  suspension  of 
network  charges);  additional  wage  pressures 
following  negative  real  public  sector  wages  in 
2022. 

costs  of 

The debt-to-GDP ratio is expected to be mainly 
driven  by  the  changes  in  the  headline  deficit 
and  the  denominator  effect  from  higher 
nominal  GDP.  Thus,  the  debt-to-GDP  ratio  is 
projected  to  decrease  from  74.7%  in  2020  to 
72.6% in 2023. 

95 

bn EURCurr. prices% GDP02-1720182019202020212022202352.0100.02.14.43.3-4.28.13.73.127.352.51.83.64.8-6.611.64.12.510.520.21.53.02.04.23.90.41.110.520.2-0.29.75.5-8.212.33.85.043.583.56.06.24.5-8.713.24.96.040.778.25.07.14.7-9.617.44.35.752.099.92.04.83.2-3.58.84.13.31.34.23.9-4.39.03.02.60.10.4-0.90.10.80.00.00.8-0.10.3-0.1-1.60.70.50.53.22.5-0.61.40.91.5Unemployment rate (a)7.25.14.45.04.84.84.64.03.95.03.55.43.65.52.32.74.27.4-1.10.83.913.513.713.722.615.99.29.42.42.12.21.22.63.33.72.61.91.7-0.32.06.13.3-0.2-0.10.40.8-2.6-2.20.5-0.92.82.75.00.8-0.7-0.30.16.16.17.64.41.72.6-3.60.70.4-7.8-5.2-4.3-3.4-3.3-0.6-1.1-6.2-6.1-5.5-4.546.070.365.679.874.774.172.7Private ConsumptionTable II.17.1:Main features of country forecast - SLOVENIA2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
     
 
 
18.  SLOVAKIA 

The outlook for the Slovak economy is clouded by the effects of the Russian military aggression 
against  Ukraine,  which  constitute  a  severe  adverse  supply  shock.  The  sharp  rise  in  energy  and 
commodity  prices  is  expected  to  raise  production  costs  and  to  erode  the  purchasing  power  of 
domestic  households, constraining  economic  growth  over  the  forecast  horizon,  to  2.3%  in  2022 
and 3.6% in 2023. As a result of rising costs, inflation is forecast to increase sharply to 9.8% in 
2022,  and  stay  elevated  at  6.8%  throughout  2023.  Due  to  high  nominal  GDP  growth  and  the 
phase-out of pandemic-related measures, budget deficits are projected to decline to 3.6% of GDP 
2022, and 2.6% in 2023, helping to contain the public debt-to-GDP ratio. 

Rising costs weaken economic growth 

After  growing  by  3%  in  2021,  the  Russian 
invasion  of  Ukraine  is  expected  to  slow  down 
the  recovery  of  the  Slovak  economy  from  the 
pandemic. The ensuing adverse supply shock is 
projected to raise inflationary pressures and to 
constrain  economic  activity  throughout  the 
forecast  horizon.  This  would 
the 
anticipated trajectory of GDP persistently lower, 
resulting in an expected annual GDP growth of 
2.3% in 2022, and 3.6% in 2023.  

shift 

automotive  industry.  Moreover,  while  direct 
exposure  to  Russian  and  Ukrainian  exports  is 
relatively  low,  weaker  growth  in  other  trading 
partners  is  forecast  to  limit  Slovakia’s  export 
performance  in  the  coming  years, leading  to  a 
negative  growth  contribution  from  net  exports. 
The deteriorating terms-of-trade weighs further 
on the trade balance, contributing to a widening 
current account deficit. 

energy 

intensive 

contributing 

The military aggression is set to lead to a sharp 
rise  in  imported  energy  and  commodity  prices, 
constituting  a  negative  terms-of-trade  shock, 
which 
from 
transfers  purchasing  power 
Slovakia  to  the  rest  of  the  world.  This  would 
in 
raise  costs  and  constrain  production 
industry. 
Slovakia’s 
Furthermore,  by 
to  broader 
inflationary  pressures,  this  is  also  expected  to 
erode  the  purchasing  power  of  households, 
to  weigh  on  private 
which 
consumption  in  the  coming  years, especially  in 
light  of  the  relatively  large  share  of  energy  in 
Slovak  household  expenditures.  The  hit  to 
is 
lower 
consumption  from 
expected  to  be  only  partially  cushioned  by  a 
declining  saving  rate  and  lower  real  interest 
rates.  Elevated  uncertainty  is  assumed  to  curb 
private  investment  demand,  but  a  boost  to 
public  investment  from  Next  Generation  EU 
funds is projected over the forecast horizon. 

incomes 

forecast 

real 

is 

In  addition  to  rising  input  costs  and  persisting 
global  semiconductor  shortages,  Slovakia’s 
export  industry  is  expected  to  be  adversely 
affected by further supply-chain disruptions as 
a result of the military aggression and renewed 
lockdowns in China. Shortages of cable harness 
and  neon  gas,  largely  imported  from  Ukraine, 
in  the 
are  expected  to  constrain  output 

96 

Real wage growth to decline 

facing 

shortages, 

The recovery from the pandemic brought along 
an increasingly tight labour market, with certain 
sectors 
and 
labour 
employment having reached its pre-crisis levels 
by the end of 2021. However, current economic 
headwinds  are  expected  to  moderate  further 
expansion,  leading  to  a  projected  employment 
growth of 1.9% in 2022, and 0.6% in 2023. The 
decline  in  the  unemployment  rate  is  also 
forecast  to  slow  down,  decreasing  to  6.3%  by 
2023 from 6.8% last year. The effect of people 
fleeing Ukraine on  the Slovak labour market is 
assumed  to  be  small.  Amid  this weaker labour 
market environment, employee compensation is 
expected  to  lag  behind  the  spikes  in  inflation, 
resulting  in  real  wages  declining  in  2022,  and 
catching up only slowly in 2023.  

-8-6-4-20246814151617181920212223Graph II.18.1: Slovakia-Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
                  
Inflation rises sharply 

Recent  spikes  in  imported  energy  and  food 
prices  have  intensified  inflationary  pressures, 
which  are  becoming  more  broad-based  as 
higher  production  costs  pass  through  to  other 
prices as well. Combined with persisting supply-
side  bottlenecks,  which  raise  goods  prices,  this 
subjects  the  Slovak  economy  to  an  adverse 
cost-push 
recovering 
demand  in  contact-intensive  sectors  is  making 
services  more  expensive.  As  a  result,  annual 
HICP  inflation  is  forecast  to  rise  sharply  to 
9.8%  in  2022  from  2.8%  in  2021.  Despite 
decelerating  quarterly  price  dynamics,  annual 
inflation is projected to stay elevated next year, 
at  6.8%,  as  regulated  energy  prices  are 
expected to adjust only at the start of 2023. 

In  addition, 

shock. 

Budget deficits to start declining in 2022 

pandemic-related 

The general government deficit increased from 
5.5%  of  GDP  in  2020  to  6.2%  in  2021,  driven 
support  measures, 
by 
including  short-time  work  schemes,  healthcare 
spending  and  support  to  selected  sectors  as 
well  as 
in  social  benefits  and 
increases 
compensation of employees.  

As  pandemic  spending  is  gradually  withdrawn, 
the  budget  deficit  is  expected  to  narrow  to 
3.6%  of  GDP  in  2022.  The  projected  high 
growth of nominal GDP is expected to boost tax 
compensation  of 
rising 
revenues,  while 

Euro Area Member States, Slovakia 

employees  should 
increase  social  security 
contributions, thus helping to reduce the deficit. 
inflation-induced 
On  the  other  hand,  the 
increase in the growth of public expenditures is 
assumed  to  occur  only  with  a  delay  (e.g 
pensions  being  indexed  to  previous  year’s 
shield 
inflation). 
households  against  the  impact  of  high  energy 
prices,  or  additional  support  measures  for 
persons  fleeing  Ukraine,  pose  upside  risks  to 
public  expenditures.  In  2023,  the  government 
budget  deficit  is expected  to  further narrow  to 
2.6%  of  GDP  as  nominal  GDP  growth  stays 
high. 

Increased 

spending 

to 

Public  investment  is  forecast  to  accelerate  in 
both  2022  and  2023.  This 
is  driven  by 
increased  EU  funds  absorption  due  to  the 
assumed  drawdown  of  remaining  funds  from 
the  previous  programming  period  coinciding 
with the start of the new  programming  period, 
as well as by additional support from the RRF. 

After  an  increase  from  59.7%  in  2020  to 
63.1%  in  2021,  the  government  debt-to-GDP 
ratio is projected to gradually decline to 61.7% 
in  2022  and  58.3%  in  2023,  helped  by 
moderating  primary  budget  deficits  as  well  as 
by strong nominal GDP growth. 

97 

bn EURCurr. prices% GDP02-1720182019202020212022202397.1100.04.03.82.6-4.43.02.33.656.057.73.14.12.7-1.31.21.91.920.921.52.5-0.14.60.91.9-1.70.218.619.12.72.86.7-11.60.610.813.491.293.98.85.10.8-7.310.22.97.491.894.57.04.82.1-8.211.23.47.696.098.83.94.32.2-3.83.02.33.82.92.93.8-3.01.22.83.90.00.60.0-2.22.60.00.01.20.3-1.20.9-0.8-0.5-0.41.02.01.0-1.9-0.61.90.6Unemployment rate (a)13.46.55.76.76.86.76.35.36.06.83.65.97.87.02.24.25.26.32.27.43.97.310.39.810.98.86.76.21.72.02.52.42.46.65.52.72.52.82.02.89.86.8-0.7-0.9-0.3-0.5-1.1-1.40.1-0.41.1-0.50.1-1.2-3.1-3.5-2.7-0.3-2.0-0.8-2.4-4.3-4.1-3.8-1.0-1.3-5.5-6.2-3.6-2.6-2.2-2.0-2.4-4.5-5.7-3.3-2.643.349.648.159.763.161.758.3Private ConsumptionTable II.18.1:Main features of country forecast - SLOVAKIA2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
   
 
 
19.  FINLAND 

Finland’s  economy  rebounded  strongly  in  2021.  However,  Russia’s  war  of  aggression  against 
Ukraine and its immediate and wider consequences are set to take their toll on Finnish exports 
and weigh on private consumption and investment this year, driving GDP growth down to 1.6% in 
2022 and 1.7% in 2023. Inflation is forecast to accelerate to 4.5% in 2022, exerting pressure on 
household purchasing power. The general government deficit is projected to reach 2.2% of GDP in 
2022 and 1.7% in 2023.  

Strong outcomes in 2021 

Finland’s economy  recovered  strongly  in  2021, 
with GDP growth reaching 3.5% and exceeding 
the  pre-pandemic  level  already  in  the  second 
quarter  of  2021.  Robust  growth  was driven  by 
domestic  demand,  especially  including  private 
consumption.  The  removal  of  some  COVID-19 
restrictions,  strong  wage  growth, 
related 
accumulated 
increasing 
employment  were  the  main  factors  supporting 
the  rebound  in  consumption.  After  a  two-year 
contraction, investment also grew, especially in 
the 
last  quarter  of  2021.  However,  the 
contribution  of  net  exports  to  growth  was 
slightly  negative  due  to  a  more  dynamic 
recovery in imports.  

savings 

and 

A mixed picture ahead 

The  positive  economic  momentum  continued 
into  early  2022,  with  sentiment  indicators 
pointing  to  improved  expectations  across  the 
board.  This  changed  notably  with  the  onset  of 
Russia’s  war  of  aggression  against  Ukraine  in 
February.  International  sanctions  imposed  on 
Russia  and  retaliation  measures  adopted  by 
Russia  have  translated  into  a  immediate  and 
significant  drop  in  trade  between  Finland  and 
Russia that is set to weigh on export growth in 
2022.  In  2023,  however,  a  re-orientation  of 
exports  to  other  markets  should  allow  for  the 
contribution  of  net  exports  to  growth  to  turn 
positive. 

At  the  same  time,  elevated  inflation  and 
increased  geopolitical  tensions  are  set  to  take 
their  toll  on  private  consumption.  Accumulated 
savings and recovering demand for services are 
expected  to  partially  offset  this  negative 
projected 
impact. 
private 
deceleration 
consumption  is  forecast  to  grow  by  2.1%  in 
2022  and  1.7%  in  2023.  Public  consumption 
growth  is  set  to  follow  a  similar  path  in  2022 

the 
growth, 

Together  with 

in  wage 

98 

and then contract in  2023 as some temporary 
government expenditure measures expire. 

Due  to  high  uncertainty,  private  investment  is 
forecast  to  decelerate  in  2022  before  picking 
up  the  year  after.  Public  investment  plans, 
which  are  partly  financed  by  the  RRF,  will  also 
support  investment  growth  over  the  forecast 
horizon.  Overall,  GDP  is  projected  to  grow  at 
1.6% and 1.7% in 2022 and 2023, respectively. 
Finland’s  historically  close  trade  relations  with 
Russia could be deemed a source of risk to the 
current  economic  outlook  as  businesses  might 
struggle  to  adapt  to  the  new  geopolitical 
circumstances. 

Tightening labour market and high inflation  

the 

In  2021,  employment  grew  by  2%  and 
exceeded  its  pre-pandemic  level.  In  February 
2022, 
rate  was 
unemployment 
approximately  1  pp.  lower  compared  to  a  year 
ago. At the same time, the number of vacancies 
companies 
increased 
increasingly  report  difficulties  to  find  skilled 
staff.  Consequently,  the  unemployment  rate  is 
projected  to  decline  further  over  the  forecast 
horizon, though not as fast as expected before 
due  to  the  negative  economic  consequences 
stemming from the war. 

considerably, 

and 

-8-6-4-2024614151617181920212223Graph II.19.1: Finland -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
      
Euro Area Member States, Finland 

HICP inflation accelerated in the last quarter of 
2021  due  to  a  spike  in  energy  prices.  This  is 
expected  to  continue  in  the  first  half  of  2022, 
also due to rising food prices, lifting inflation to 
4.5% in 2022 as a whole. The assumed decline 
in  energy  prices  is  projected  to  result  in  a 
deceleration  of  the  rate  of  inflation  later  this 
year  and  also  in  2023.  Core  inflation  is 
projected to be driven by increases in prices of 
processed food and services. 

General  government  deficit 
decrease 

to  slightly 

In  2021, 
the  general  government  deficit 
declined  thanks  to  strong  revenue  collection 
and  gradual  withdrawal  of  stimulus  measures. 
In  2022,  the  measures  taken  by  the  Finnish 
government  to  counter  the  impact  of  the 
COVID-19 pandemic are set to amount to 0.2% 
of GDP compared to 1.7% in 2021. 

Against  the  backdrop  of  Russia’s  war  of 
the  Finnish 
aggression  against  Ukraine, 
government has announced additional spending 
on defence of 0.3% of  GDP in 2022 and 0.1% 
in 2023. The general government deficit is also 
set to be affected by the costs of dealing with  

the  ongoing  humanitarian  crisis,  which  are 
projected  at  around  0.1% of  GDP  in  2022  and 
0.2%  in  2023.  In  addition,  the  fiscal  forecast 
takes  into  account  measures  amounting  to 
approximately  0.1%  of  GDP  to  mitigate  the 
economic  and  social  impact  of  high  energy 
prices. 

The  forecast  also  incorporates  expenditures, 
including  investment,  financed  by  RRF  grants 
amounting  to  approximately  0.2%  of  GDP  in 
2022 and 2023. Public investment is projected 
to remain high in both 2022 and 2023. Overall, 
despite  a  bleaker  economic  outlook  and 
additional  expenditure  measures,  the  general 
is  forecast  to  slightly 
government  deficit 
decrease to 2.2% of GDP in 2022, and 1.7% in 
2023.  

in  2021, 

the  general 
After  a  decline 
government  public  debt-to-GDP 
is 
ratio 
expected  to  increase  from  65.8%  to  65.9%  in 
2022 and 66.6% in 2023. 

99 

bn EURCurr. prices% GDP02-17201820192020202120222023252.9100.01.31.11.2-2.33.51.61.7127.850.51.91.70.7-4.13.12.11.760.924.11.02.02.00.43.21.6-0.859.123.41.23.6-1.5-0.31.22.13.098.538.92.51.56.7-7.54.72.14.397.938.73.45.72.4-6.65.32.93.7257.2101.71.31.51.3-1.13.51.41.61.52.20.5-2.12.71.91.40.10.5-0.90.10.80.00.0-0.2-1.61.6-0.3-0.2-0.30.30.62.51.8-1.92.01.00.4Unemployment rate (a)8.47.56.87.77.77.26.92.21.31.20.44.43.33.01.42.61.90.83.02.71.77.87.28.512.79.27.17.01.52.01.51.62.73.82.31.61.21.10.42.14.52.3-0.70.8-0.61.80.5-1.0-0.24.60.11.01.31.20.60.81.6-1.8-0.30.70.70.20.40.4-0.9-0.9-5.5-2.6-2.2-1.7-1.0-1.0-1.2-3.7-2.0-1.7-1.447.859.859.669.065.865.966.6Private ConsumptionTable II.19.1:Main features of country forecast - FINLAND2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Note : Contributions to GDP growth may not add up due to statistical discrepancies.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
      
 
 
Non-EA Member States 

 
 
 
20.  BULGARIA 

In 2022, price pressures and the associated adjustment  process are  set to  weigh on  household 
consumption, while the increased uncertainty is expected to negatively affect private investment. 
With inflation gradually slowing down in 2023, GDP growth is projected to accelerate from 2.1% 
in 2022 to 3.1% in 2023. The government balance is forecast to slowly recover to 3.7% of GDP in 
2022. The effect of the phase-out of most pandemic-related measures is expected to be partially 
offset by measures put in place in response to high energy prices, aid to people fleeing the war in 
Ukraine and pension updates. 

Lower growth amid strong price pressures 

In  2021,  economic  activity  recovered  from  the 
COVID-19  crisis  on  the  back  of  robust  private 
consumption  growth  and  strong  rebound  in 
goods  exports.  Investment  was  on  a  declining 
path  due  to  high  uncertainty.  With  the  global 
rise in energy prices, domestic inflation started 
to accelerate in the second half of 2021. 

Russia’s war of aggression against Ukraine and 
the  sanctions  on  the  Russian  economy  pose 
additional  challenges  for  the  production  sector 
through the trade  channel. The direct exposure 
of  Bulgarian  goods  exports  to  Russia  and 
Ukraine  is  relatively  limited,  at  1.3%  for  each 
country  in  2021.  Nevertheless,  the  overall 
negative effect of the war on external demand 
is 
limit  export  dynamics.  The 
discontinuation  of  natural  gas  supplies  by 
Gazprom 
is  expected  to  be 
in 
through  alternative  sources, 
compensated 
leading to a one-off increase in gas prices.  

late  April 

set 

to 

In  2023,  GDP  growth  is forecast  to  accelerate, 
supported  by the intensified  public investment, 
financed by the RRF, and the improved outlook 
for external demand. 

Labour demand set to stagnate 

The  decreased  hiring  intensity  is  expected  to 
lead  to  a  stabilisation  of  unemployment  rates 
at  slightly  below  5%.  The 
labour  market 
situation  is  set  to  improve  the  bargaining 
position  of  employers,  leaving  wages  to  grow 
below  consumer  prices.  People  fleeing  the  war 
in  Ukraine  are  not  expected  to  immediately 
integrate  in  the  labour  market,  notably  in  the 
context  of  the  decreased  hiring  intensity.  They 
are, however, expected to increase demand for 
goods, services and accommodation.  

inflation  driven  by  energy  and 

High 
commodity price pressures 

Consumer  price  inflation  is  expected  to  reach 
11.9% in  2022 and then to  decrease to  5% in 
2023.  All  HICP  components  are  forecast  to 
exhibit  high  increases  in  2022.  Energy  price 
inflation  is  projected  to  gain  momentum  until 
mid-2022 and then to gradually abate and turn 
negative  in  2023,  following  with  a  lag  the 
expected gradual decline in international oil and 

GDP  growth is expected to slow down to 2.1% 
in 2022, due to a slower expansion in domestic 
and  external  demand,  and  grow  by  3.1%  in 
2023.  Given  the  high  energy  intensity  of  the 
economy,  with  energy  and  commodity  prices 
set  to  remain  high,  firms  are  expected  to 
respond  to  the  cost-push  shock  by  restricting 
nominal  wage  growth  and  postponing  new 
hiring and investment  decisions. On aggregate, 
firms’  reactions  are  forecast  to  lead  to  lower 
investment activity. Lower private investment is 
forecast  to  be  fully  compensated  by  public 
investment, supported by the RRF funds.  

Private  consumption  growth  is  expected  to 
decelerate  markedly  to  2.8%  in  2022  and  to 
increase  slightly  to  3%  in  2023.  The  2022 
slowdown  in  consumer  spending  is  linked  to 
expected strong price increases that are set to 
erode real disposable income.  

102 

-8-6-4-2024614151617181920212223Graph II.20.1: Bulgaria -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
       
Non-EA Member States, Bulgaria 

gas  prices.  High  annual  food  inflation  in  2022 
is  driven  by  the  strong  increase  in  the  first 
three  months  of  the  year  and  the  expected 
dynamics of international food commodity and 
energy  prices.  Services  inflation  is  driven  by 
cost-push  shocks  in  the  transport  and  catering 
services.  Higher prices of non-energy industrial 
goods  are  set  to  increase  via  cost  pressures 
and higher prices of imported goods. 

schemes 

the measures implemented in response to high 
the  extension  of  business 
energy  prices, 
system 
pension 
and 
support 
amendments  continue  to  weigh  on  public 
finances.  However,  the  deficit  is  on  track  to 
further fall to 2.4% in 2023 on the back of the 
positive  impact  of  RRF  investments  on  the 
economy  and  the  phase-out  of  COVID-19 
measures. 

Government  budget  balance  set  to  slowly 
recover 

The  general  government  budget  deficit 
is 
forecast  to  improve  only  slightly  in  2022, 
reaching  3.7%  of  GDP,  from  4.1%  in  2021. 
While  the  costs  of  most  pandemic  support 
measures  are  gradually  falling  from  4.3%  of 
GDP  in  2021  to  1.8%  of  GDP  in  2022,  new 
measures in response to high energy prices and 
Russia’s military aggression against Ukraine are 
preventing  a 
the 
government balance. On top of increasing fiscal 
costs related to the people fleeing Ukraine and  

recovery  of 

stronger 

Bulgaria’s general government debt ratio is set 
to  marginally  increase  to  25.3%  of  GDP  in 
2022 with a further increase to 25.6% of GDP 
in 2023 due to the persistent deficits. However, 
in  both  years,  the  snowball  effect  on  gross 
public debt as a percentage of GDP is projected 
to  be  negative,  thereby  somewhat  cushioning 
the impact of the deficits. 

103 

bn BGNCurr. prices% GDP02-17201820192020202120222023132.7100.03.42.74.0-4.44.22.13.178.859.43.83.76.0-0.48.02.83.026.520.01.65.32.08.34.00.31.722.016.64.05.44.50.6-11.04.06.983.763.07.61.74.0-12.19.94.54.282.262.07.35.85.2-5.412.25.04.5128.496.73.5-3.54.6-3.64.41.33.03.84.14.71.33.42.43.30.01.10.0-1.21.90.00.0-0.4-2.4-0.7-4.4-1.1-0.3-0.20.6-0.10.3-2.30.20.20.4Unemployment rate (a)11.66.25.26.15.35.45.38.19.76.97.29.59.77.75.26.73.19.55.47.74.8-3.4::::::4.24.25.24.26.29.53.93.42.62.51.22.811.95.01.60.71.94.32.1-0.3-0.8-13.2-4.8-4.7-3.2-5.1-5.7-5.9-5.21.01.9-0.5-1.1-1.8-1.8-0.61.72.1-4.0-4.1-3.7-2.4-0.31.51.4-2.9-3.8-3.5-2.724.522.120.024.725.125.325.6General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Note : Contributions to GDP growth may not add up due to statistical discrepancies.Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.20.1:Main features of country forecast - BULGARIA2021Annual percentage changeGDP 
 
 
             
 
 
21.  CZECHIA 

Exacerbated  supply-chain  disruptions  and  rising  energy  prices  driven  by  Russia’s  war  of 
aggression against Ukraine, as well as the fiscal costs associated with the inflow of people fleeing 
Ukraine, are impacting the recovery of the Czech economy. Economic growth is forecast at 1.9% 
in 2022 and 2.7% in 2023, whilst being fuelled by domestic demand, including public investment 
supported by the RRF. Inflation is projected to peak in the second quarter of this year, driven by 
energy prices, and forecast to overage 11.7% over 2022. Inflation is expected to gradually decline 
to 4.5% in 2023. The budget deficit is expected to start decreasing to 4.3% of GDP  in 2022 and 
3.9% of GDP in 2023, supported by high nominal GDP growth. Consequently, the pace of growth 
of government debt-to-GDP ratio is set to slow down.   

Czechia’s industry-based economy, which relies 
on  imports,  is  set  to  take  a  strong  hit  from 
supply  chain  disruptions  and  increasing  energy 
prices.Net  exports  are  forecast  to  have  a  near 
neutral  contribution  to  economic  growth  in 
2022  due  to  supply  shortages,  longer  delivery 
times and increased transportation cost, as well 
as  to  a  similar 
impacted  macroeconomic 
situation in the main trading partners.  

Rising  cost  and  uncertainty  to  weaken 
economic growth  

Annual GDP growth reached 3.3% in 2021 and 
is  forecast  to  slow  down  to  1.9%  in  2022, 
driven by exacerbating supply chain disruptions 
resulting  from  new  bottlenecks  created  in 
relation to the Russian invasion of Ukraine and 
lockdowns  in  China,  as  well  as  an  elevated 
inflation  rate  caused  by  higher  energy  and 
commodity  prices.  Domestic  demand  is  set  to 
remain the central growth driver. Supported by 
a  very  gradual  normalisation  of  international 
trade  as  from  2023.  In  2023,  real  GDP  is 
forecast  to  increase  by  2.7%,  surpassing  the 
pre-pandemic  output  level  in  the  first  half  of 
the year.   

High  inflation  is  projected  to  substantially 
squeeze  real  disposable 
income.  Yet,  the 
slowdown  in  private  consumption  growth  is 
mitigated  by  the  expenditure  of  the  over 
400,000 persons fleeing from Ukraine who are 
assumed to have entered Czechia by the end of 
2023.  Due 
increased  economic 
uncertainty in 2022, the saving rate is forecast 
to  remain  high  but  is  expected  to  gradually 
converge 
long-term  average, 
its 
reflecting  higher  prices  for  consumers  and  the 
relaxation of pandemic restrictions.  

towards 

the 

to 

Government consumption growth is set to slow 
down  as  pandemic-related  expenditure 
is 
phased-out.  Investment  activity  is  projected  to 
increase  by  3.1%  in  2022,  supported  by  low 
real interest rates, while negatively affected by 
rising uncertainty and slower economic growth. 
Investment  growth  is  forecast  to  increase  in 
2023,  supported  by  the  economic  recovery  as 
well as by a boost to public investment through 
the RRF.  

104 

Labour market to remain robust  

The population in Czechia is forecast to grow by 
more  than  3%  in  2022  due  to  the  arrivals  of 
those  fleeing  Ukraine.  Czechia’s  tight  labour 
market  is  expected  to  gradually  absorb  this 
increase,  noting  that  most  persons  arriving 
from  Ukraine  are  assumed  to  be  inactive  over 
the forecast horizon. The unemployment rate is 
therefore projected to remain around 2.6%. 

Inflation expected to peak in 2022-Q2 

Inflation  further  increased  following  Russia’s 
aggression  against  Ukraine,  mostly  driven  by 
elevated energy and commodity prices, as well 
as  food  prices.  Inflation  is  forecast  to  peak  in 
the  second  quarter  of  2022,  but  to  decline 

-8-6-4-20246814151617181920212223Graph II.21.1: Czechia -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
afterwards, averaging 11.7% in 2022. Inflation 
is  projected  to  decline  towards  4.5%  in  2023, 
inflation 
supported 
expectations  as  well  as  a stronger  domestic 
currency and more stable energy prices. 

well-anchored 

by 

Fiscal consolidation to start in 2022 

The  budget  deficit  came  in  at  5.9%  of  GDP  in 
2021,  slightly  higher  than  5.8%  in  2020,  as 
measures  to  support  the  economy  during  the 
COVID-19  crisis  remained  in  place.  Measures 
like the “Antivirus” short-time work scheme, the 
“Compensation  bonus  for  self-employed”  and 
support  programmes  targeted  at  companies 
added  to  expenditure  while  a  personal  income 
tax reduction lowered revenues. 

tax 

revenues,  even 

With  the  withdrawal  of  the  temporary  support 
measures, the budget deficit is set to decrease 
to 4.3% of GDP in 2022. High inflation is likely 
to  boost 
if  private 
consumption  growth  will  be  limited  in  real 
terms.  Further  increases  in  compensation  of 
employees  are  also  set  to  contribute  to 
expanding  social  security  contributions.  An 
increase  in  public  expenses  on  the  back  of 
to  help  households  cope  with 
measures 

Non-EA Member States, Czechia 

increased  inflation,  as  well  as  costs  related  to 
those fleeing Ukraine, are likely to be offset by 
high  GDP  deflator.  Its  growth  is set  to  reach  a 
20-year  high  and  to  lead  to  a  contraction  of 
current expenses as percentage of GDP.  

In  2023,  this  trend  is  likely  to  continue,  but 
growth  in  public  expenditure  is  expected  to 
accelerate  due  to  inflation-related  indexations 
(e.g.  automatic  indexation  of  pensions).  The 
deficit is, thus, expected to reach 3.9% of GDP 
in 2023.  

Public  investment  is  set  to  expand  further 
towards 5% of GDP, supported by the RRF and 
the  increase  in  the  absorption  of  other  EU 
funds,  as  the  remaining  funds  from  the 
previous  programming  period  are  still  being 
drawn  at  the  same  time  with  those  from  the 
new programming period. 

While public debt is still low compared to other 
EU  Member  States,  the  pace  of  its  growth  in 
2020-2021  was  above  the  EU  average.  The 
public  debt-to-GDP  ratio  is  forecast  to  rise 
further  to  42.8%  in  2022  and  44.0%  in  2023, 
driven  by  the  negative  headline  balance,  being 
only partly offset by nominal GDP growth. 

105 

bn CZKCurr. prices% GDP02-172018201920202021202220236127.1100.02.83.23.0-5.83.31.92.72795.645.62.53.52.7-6.84.42.02.01300.921.21.53.82.53.41.60.61.31563.225.52.210.05.9-7.50.93.15.64442.372.57.93.71.5-6.95.11.23.54255.769.57.25.81.5-6.911.51.23.65876.595.92.63.42.4-3.02.41.42.62.14.93.3-4.52.61.82.70.1-0.5-0.3-0.84.50.00.00.7-1.20.0-0.5-3.80.10.00.61.30.2-1.70.12.20.3Unemployment rate (a)6.32.22.02.62.82.62.64.38.17.23.25.72.45.32.06.14.37.72.42.82.811.912.213.121.020.815.213.91.52.63.94.44.17.44.71.82.02.63.33.311.74.5-0.1-0.20.42.00.2-2.10.11.23.74.15.01.2-0.3-0.3-3.1-0.6-0.92.5-2.3-3.7-3.8-2.60.90.3-5.8-5.9-4.3-3.90.0-0.1-0.9-4.1-4.9-3.1-3.534.032.130.137.741.942.844.0 (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.General government gross debt (c)Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.21.1:Main features of country forecast - CZECHIA2021Annual percentage changeGDP 
 
 
   
 
 
22.  DENMARK 

Following  a  strong  post-pandemic  rebound  last  year,  growth  in  2022  is  forecast  to  decelerate 
considerably  as  high  energy  prices  and  the  direct  and  indirect  effects  of  Russia’s  invasion  of 
Ukraine  take  a  toll  on  supply  chains  and  push  costs  and  prices  further  up.  Public  finances  are 
proving  resilient,  with  a  general  government  surplus  expected  in  2022  and  2023,  mainly 
explained by the easing of expenditure pressures in the post-pandemic period. 

Economic expansion hit by high energy prices 
and war 

from 

scarring 

The  Danish  economy  emerged  without  major 
apparent 
the  COVID-19 
pandemic.  Production  and  employment  growth 
leading  to  a  real  GDP 
resumed  quickly, 
in  2021.  The  strong 
expansion  of  4.7% 
expansion  was  accompanied  by 
robust 
employment  growth  and  rising  real  household 
disposable  incomes.  The  positive  growth  is  set 
to  continue  in  2022,  although  the  outlook  has 
deteriorated  following  Russia’s 
invasion  of 
Ukraine.  Economic  activity  is  expected  to  be 
constrained  by  supply  side  disruptions,  further 
energy  and  raw  material  price  rises  and 
shortages,  as  well  as  heightened  general 
uncertainty.  Overall,  real  GDP  is  forecast  to 
grow by 2.6% in 2022 before easing to 1.8% in 
2023. 

inputs for traded goods. As a result, Denmark’s 
current  external  surplus  is  set  to  decline  to 
7.8%  of  GDP  in  2022  and  remain  around  this 
level in 2023.  

interest 

in  2023.  Higher 

Growth  in  both  construction  and  equipment 
investment  is  forecast  to  be  modest  in  2022 
and 
rates  and 
markedly  more  expensive  building  materials 
are  likely  to  constitute  a  drag  on  housing 
investment while equipment investment is also 
projected  to  be  negatively  affected  by  higher 
interest 
rates  and  ongoing  supply  chain 
disruptions. The fallout the Russia’s invasion of 
Ukraine,  the  very  elevated  energy  prices  and 
inflationary  pressures  constitute  downwards 
risks to the forecast.  

spending 

The  second  half  of  2021  was  marked  by  a 
private  consumption  rebound  as  COVID-19 
related  restrictions  were  lifted  and  as  pent-up 
savings  allowed  households  to  expand  their 
consumption.  This 
revival  was 
supported  by  certain  government  measures, 
notably the release of frozen savings. In 2022 
and  2023,  private  consumption  is  expected  to 
grow  at  a  more  moderate  rate,  tempered  by 
high inflation. Additionally, the high uncertainty 
created  by  the  Russian  invasion  of  Ukraine  is 
likely  to  keep  the  household  saving  rate 
somewhat elevated.  

Denmark’s  direct  exports  to  Russia  are  overall 
modest, hence the sanctions imposed by the EU 
on Russia mainly affect Danish exports through 
the negative impact on sentiment, lower global 
growth  and  through  potential  disruptions  to 
supply  chains.  Exports  of  goods  and  services 
are  projected  to  expand  by  5.4%  in  real  terms 
while  import  volumes  are  projected  to  rise  by 
some 5.0% in 2022. In value terms, the growth 
in imports is projected to exceed that of exports 
markedly,  reflecting  price  developments  in  key 

106 

Labour market bottlenecks 

The  economic  expansion  since  mid-2021  was 
accompanied  by  strong  employment  growth, 
resulting  in  labour  shortages  across  a  number 
of  sectors.  These  continue  to  be  especially 
pronounced in those services that were subject 
to severe restrictions, and the construction and 
manufacturing  sectors  are  now  also  facing 
similar difficulties. Labour market pressures are 
projected to ease slightly as of this year due to 
an expanding labour force — partly thanks to a 
rise  in  the  number  of  workers  from  other 
countries  —  and  the  gradual  increase  in  the 

-6-4-2024614151617181920212223Graph II.22.1: Denmark -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
Non-EA Member States, Denmark 

retirement  age  over  the  coming  years.  The 
unemployment rate is set to decline from 5.1% 
in 2021 via 4.8% in 2022 to 4.7% in 2023.  

Inflation at 35-year high 

Consumer  prices  have  accelerated  sharply  in 
the  first  months  of  2022,  reaching  year-on-
year  inflation  figures  not  recorded  since  the 
1980s.  While  the  inflationary  pressures  were 
initially  mainly  attributable  to  energy,  core 
inflation is now also on the rise: in March 2022, 
HICP  rose  by  6.0%  y-o-y,  and  core  inflation 
increased to 3.2%. HICP inflation is expected to 
grow by 5.1% annually in 2022 and by 2.7% in 
2023, due to normalising energy prices.  

Strong government finances  

In 2021, the government recorded a surplus of 
2.3%  of  GDP,  reflecting  strong  tax  revenues, 
extra  one-off  revenues  from  the  taxation  of 
released  holiday  savings  and  a  smaller  than 
expected  take-up  of  some  COVID-19  related 
relief measures. 

In  2022,  the  general  government  balance  is 
forecast  to  record  a  surplus  of  0.9%  of  GDP, 
driven  by  the  growth  moderation  and  non-
recurrence of certain exceptional revenues. The 
arrival  of  people  fleeing  the  war  in  Ukraine  is 
expected 
through 
to  be  accommodated 
additional  government  consumption,  financed 
via foreign development aid. 

In 2023, the government surplus is expected to 
decline  to  0.6%  of  GDP,  reflecting  further 
moderation of growth.  

The  government  debt  ratio  returned  to  its 
downward  trajectory  in  2021, falling  to  36.7% 
of  GDP.  Continued  government  surpluses  and 
significant  denominator  effects  only  partly 
countered by stock-flow effects are expected to 
bring  the  gross  debt  level  to  34.9%  of  GDP  in 
2022  and  further  down  to  33.9%  of  GDP  in 
2023. 

107 

bn DKKCurr. prices% GDP02-172018201920202021202220232496.6100.01.22.02.1-2.14.72.61.81138.645.61.43.51.2-1.34.22.32.1608.724.41.30.01.5-1.73.71.40.6560.022.41.74.20.15.15.62.72.31487.259.63.13.45.0-7.07.85.44.51319.752.93.95.13.0-4.18.25.04.62576.6103.21.42.62.2-1.64.52.31.71.32.51.00.14.12.01.70.00.1-0.2-0.10.30.10.0-0.1-0.61.4-2.00.30.50.20.31.51.4-0.72.61.91.1Unemployment rate (a)5.95.15.05.65.14.84.72.61.61.92.33.23.62.91.71.11.23.81.12.82.27.511.29.511.610.610.19.41.70.70.72.62.43.32.31.50.70.70.31.95.12.70.8-1.6-0.11.5-5.9-3.50.34.03.65.35.33.82.62.95.37.38.88.18.37.87.70.60.84.1-0.22.30.90.60.31.14.32.23.51.92.240.234.033.642.136.734.933.9General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.22.1:Main features of country forecast - DENMARK2021Annual percentage changeGDP 
 
 
 
      
 
 
23.  CROATIA 

After a strong recovery in 2021, GDP is forecast to grow by 3.4% in 2022, mostly supported by 
domestic  demand  and  as  the  labour  market  is  expected  to  stay  dynamic,  with  employment 
growing by around 1.5% this year. Inflation is projected to accelerate to 6.1% in 2022, driven by 
rising energy and food prices. The adopted fiscal package, including direct transfers to households 
and  SMEs  and  cuts  in  indirect  taxes,  should  cushion  the  effects  of  rising  prices  on  disposable 
incomes  and  corporate  profits.  Despite  this  further  fiscal  support  to  the  economy,  the 
sustainability  of  the  key  fiscal  figures  is  expected  to  continue  improving,  with  the  general 
government  deficit  narrowing  toward  1.8%  of  GDP  and  public  debt  to  around  73%  of  GDP  by 
2023. In 2023 GDP is expected to grow by 3.0%. 

the  current  global  developments.  Imports  are 
projected to increase in line with final demand, 
particularly driven by capital goods required for 
investments.  The  overall  contribution  of  net 
exports  to  growth  is  expected  to  stay  mildly 
positive in 2022.  

In  2023,  GDP  is  forecast  to  expand  by  3.0%, 
with  a  positive  contribution  from  domestic 
demand  and  a  negative  contribution  from  net 
exports, due to the rising import dependency of 
final  demand.  The  balance  of  risks  to  the 
forecast  is  tilted  to  the  downside,  with  key 
negative risks stemming from the rising global 
uncertainties  and  commodity  price  shocks, 
which  could  affect  both  domestic  and  external 
demand.  On  the  upside,  the  envisaged  euro 
adoption  in  2023  could  benefit  investments 
and  trade,  while  RRP-related  investments  and 
reforms,  if  swiftly  implemented,  could  more 
rapidly  increase  the  growth  potential  of  the 
economy. 

Labour market should stay dynamic 

Employment  growth  is  expected  to  remain 
dynamic  at  around  1.5%  in  2022  and  2023, 
driven  by a stable  macroeconomic outlook, the 
expected  acceleration  of  the  investment  cycle 
and  RRP-supported  active 
labour  market 
policies.  However,  activity  and  employment 
rates  are  expected  to  stay  below  the  EU 
average  due  to  the  structural  issues  still 
present on the labour market, addressing which 
requires time to address. After peaking at 7.6% 
in 2021, the unemployment rate is projected to 
gradually  decline  moving  below  6.5%  by  the 
end of the forecasting horizon. 

Despite uncertainties, growth to remain solid 

After  a  strong  rebound  of  the  economy  in 
2021, with a growth rate of 10.2%, GDP growth 
in 2022 is expected to be more modest but still 
solid  at  3.4%  as  the  direct  exposure  of  the 
Croatian  economy  to  the  effects  of  Russia’s 
military  aggression  against  Ukraine  is  limited. 
Private  consumption  is  forecast  to grow  by 
2.4%,  lower  than  previously  expected,  due  to 
rising  consumer  prices  and  uncertainty,  which 
increases  precautionary  savings.  On  the  other 
hand,  the  implementation  of  the  RRP,  and  the 
acceleration  of  post-earthquake  reconstruction 
should  push 
investment  growth  to  6.5%, 
despite the drag induced by the rising costs of 
materials,  supply  bottlenecks  and  increased 
uncertainty.  Government  consumption  should 
retain  its  positive  contribution  to  economic 
growth, with a growth rate of around 2.5%.  

On  the  external  side,  exports  of  goods  are 
expected  to  be  affected  by  weaker  demand  in 
main  trading  partners,  but  the  growth  rate 
should remain solid, at around 5%. The growth 
of  exports  of  services  should  be  mostly  driven 
by  tourist  activity,  which 
is  expected  to 
converge  towards  pre-crisis  levels  in  spite  of 

108 

-10-8-6-4-2024681012141614151617181920212223Graph II.23.1: Croatia -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
                  
Non-EA Member States, Croatia 

Inflation  to  accelerate  driven  by  external 
shocks 

servicing  costs  should  limit  the  growth  of 
expenditures.  

HICP  inflation  is  expected  to  accelerate  from 
2.7%  in  2021  to  6.1%  in  2022,  mainly  driven 
by  rising  energy  and  food  prices  triggered  by 
shocks  on  international  commodity  markets. 
However, the spill-over from the rising costs of 
inputs (especially energy and transport) is also 
expected  to  push  core  inflation  up.  Policy 
support,  namely  cuts  in  indirect  taxes,  are 
projected  to  have  a  cushioning  effect  on 
administered  and  food  prices.  In  2023,  the 
inflation rate should decelerate to around 2.8% 
as  current  external  shocks  are  expected  to  be 
transitory. Overall, inflation dynamics in Croatia 
should continue to closely follow euro area and 
EU averages. 

Fiscal  deficit  and  debt  remain  on  an 
improving path  

Fiscal  balances  are  forecast  to  continue  to 
improve,  with  an  expected  decrease  of  the 
general  government  deficit  from  2.9%  of  GDP 
in  2021  to  2.3%  of  GDP  in  2022,  which  – 
together  with  high  nominal  GDP  growth  - 
should  bring  down  the  debt-to-GDP  ratio  from 
79.8%  close  to  75.3%.  Similarly,  on  the 
revenue  side,  indirect  tax  receipts  should  grow 
in  spite  of  tax  cuts,  due  to  solid  economic 
activity  and  accelerating  inflation.    Meanwhile, 
the  full  phasing  out  of  COVID-19-related 
support  measures  and  further savings  on  debt 

The  government  adopted  several  measures  to 
help  households  and  companies  cope  with  the 
economic  and  social  impact  of  rising  prices  of 
energy  products.  After  temporarily  freezing 
petrol  and  diesel  prices  already  in  late  2021, 
authorities  temporarily  cut  excise  duties  on 
petrol  and  diesel  from  Marchuntil  end-May 
2022.  On  top  of  these  fuel-related  measures, 
the authorities adopted a package of measures 
aimed  at  mitigating  the  effect  of  rising  prices 
of  food  and  energy.  Effective  as  of  1  April 
2022,  this  package 
includes  a  permanent 
reduction in the VAT rate on natural  gas,  heat, 
pellets,    firewood,  food,  hygienic  products  and 
tickets  for  sport  and  cultural  events.  It  also 
includes  support  measures  designed  for  both 
households and companies.  

In  the  medium  term,  the  fiscal  outlook  looks 
favourable, with the deficit decreasing to 1.8% 
of GDP and debt ratio to 73% of GDP in 2023. 
Debt  dynamics  should  be  affected  by  solid 
nominal  GDP  and  revenue  growth,  the  phasing 
out  of  temporary  inflation-related  measures 
and debt-reducing stock flow adjustments.  

109 

bn HRKCurr. prices% GDP02-17201820192020202120222023430.6100.01.82.93.5-8.110.23.43.0251.658.41.43.34.1-5.310.02.43.696.922.52.02.53.34.13.12.62.293.021.61.93.89.8-6.17.66.58.2221.851.53.83.76.8-22.733.38.45.5225.952.53.87.56.5-12.314.78.18.0431.8100.31.92.84.0-6.08.32.33.21.83.25.0-3.58.33.44.50.31.6-1.60.7-4.90.00.0-0.3-1.80.1-5.36.80.1-1.50.32.63.1-1.21.21.61.8Unemployment rate (a)13.28.56.67.57.66.36.02.63.90.42.15.63.02.71.13.60.09.8-3.11.11.57.29.99.513.4:::2.32.01.9-0.13.23.82.42.11.60.80.02.76.12.80.4-0.50.3-3.8-0.4-2.80.0-17.9-18.3-18.8-17.3-17.7-20.7-22.5-3.61.92.8-0.93.31.70.3-4.10.00.2-7.3-2.9-2.3-1.8-1.7-1.2-1.4-4.4-3.1-2.7-2.357.173.371.187.379.875.373.1General government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Trade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d)Terms of trade goodsDomestic demandInventoriesNet exportsEmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorHarmonised index of consumer pricesPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)Private ConsumptionTable II.23.1:Main features of country forecast - CROATIA2021Annual percentage changeGDP 
 
 
 
     
 
 
24.  HUNGARY 

Hungary’s economy grew strongly until early 2022, but the war in Ukraine clouds the outlook, as 
more expensive imports, trade disruptions, higher uncertainty and risk premia are set to curb GDP 
growth,  raise  inflation  and  worsen  the  external  balance.  Due  to  a  more  challenging 
macroeconomic  environment  and  new  spending  pressures,  the  budget  deficit  is  projected  to 
remain high. 

Strong growth momentum to be interrupted 

Hungary’s economy  recovered rapidly from the 
pandemic,  with  real  GDP  growing  by  7.1%  in 
2021.  The  expansion  continued  in  the  first 
quarter of 2022. Construction was bolstered by 
public investment,  while industry  had begun to 
recover  from  supply  chain  disruptions.  Retail 
sales were boosted by stimulus measures such 
in 
as  the  20%  minimum  wage 
January, the reintroduction of the 13th monthly 
pension  and  the  refund  of  last  year’s  income 
tax payments to families in February 2022. 

increase 

January  2022  have  left  them  with  some 
buffers.  At  the  same  time,  labour  supply  is 
projected  to  rise  due  to  the  newly  introduced 
income  tax  exemption  for  workers  below  age 
25,  and  the  arrival  of  people  fleeing  from 
Ukraine  on  the  labour  market.  Consequently, 
employment  growth  should  be  maintained, 
while 
to 
moderate.  Unit  labour  cost  is  forecast  to  spike 
in 2022 but slow down in  2023 as businesses 
adjust  to  weaker  demand  and  higher  input 
prices. 

real  wage  growth 

is  expected 

fades 

inflation 

Russia’s war of aggression against Ukraine has 
overshadowed  the  outlook.  GDP  growth  is 
expected to slow to 3.6% in 2022 and 2.6% in 
2023.  Private  consumption  is  forecast  to  lose 
impact  of  stimulus 
momentum  after  the 
measures 
erodes 
and 
households’  purchasing  power.  Investment  is 
set  to  be  constrained  by  slowing  demand, 
geopolitical  uncertainty,  higher  funding  costs, 
as  well  as  fiscal  consolidation  efforts.  Exports 
face headwinds from weaker external demand, 
sanctions  against  Russia  and  input  shortages. 
Higher  commodity  prices  worsen  the  external 
balance,  with  the  current  account  deficit  rising 
to 5.5% of GDP in 2022. Hungary’s net energy 
imports are projected to swell by some 3 pp of 
GDP  in  2022.  The  current  account  deficit  is 
expected to moderate to 3.5% in 2023, due to 
somewhat  lower  commodity  prices  and  the 
gradual easing of supply chain disruptions that 
hold back exports.  

Real wage growth to slow down 

Employment  rose  to  a  historic  high  in  2021, 
and  signs  of  labour  shortages  began  to  re-
emerge.  The  tight  labour  market  continued  to 
fuel strong wage growth in the first months of 
2022.  Although  more  expensive  inputs  and 
weaker  expected  demand  force  companies  to 
contain  labour  costs,  their  high  profitability  in 
in 
2021  and  the  social  contribution  cuts 

110 

Higher commodity prices to raise inflation 

With companies facing strong cost and demand 
pressure and a weaker exchange rate, inflation 
is  set  to  rise  from  5.2%  in  2021  to  9.0%  in 
2022. Inflation is forecast to peak in 2022-Q3 
after  the  price  caps  on  motor  fuel  and  basic 
food items expire. Once consumer prices adjust 
to  higher  production  costs,  lower  demand  is 
expected to ease inflation to 4.1% in 2023. 

Regulated  utility  prices,  which  are  assumed  to 
remain  unchanged  over  the  forecast  horizon, 
are an upside risk for inflation and a downside 
risk for GDP. In addition, the outlook is sensitive 
to  the  evolution  of  the  war  due  to  Hungary’s 
geographical  proximity  and  its  stronger  trade 
linkages  with  Russia  and  Ukraine  compared  to 

-8-6-4-20246814151617181920212223Graph II.24.1: Hungary -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
  
Non-EA Member States, Hungary 

other  EU  members,  as  well  as  due  to  its  high 
energy import dependency. 

Public finances under pressure  

Due  to  robust  economic  recovery  in  2021, 
Hungary’s public finances finished the year in a 
better  than  expected  shape  with  public  debt 
declining  to  76.8%  and  government  deficit 
reaching  6.8%  of  GDP.  The  growth  of  nominal 
GDP  and  revenues  remained  robust,  while 
public investment activity moderated. 

In  2022,  the  deficit  is  forecast  to  remain 
elevated  at  6.0%  of  GDP,  reflecting  the 
introduction  of  several  expansionary  measures 
and additional spending related to high energy 
prices. In 2023, the deficit is set to decrease to 
4.9%  due  to  continued  high  nominal  GDP 
growth and the  partial curbing of discretionary 
spending. Current expenditure in 2022 is set to 
grow  briskly  on  the  account  of  measures 
adopted in 2021: the full re-introduction of the 
13th monthly pension, a one-off service benefit 
for  military  and  law  enforcement  employees, 
and  wage  increases  in  the  public  sector.  The 
decision  to  postpone  some  nationally-financed 
investments,  and  a  slowdown  in  absorption  of 
EU funds are set to lead to less dynamic capital 
expenditure growth both in 2022 and in 2023. 
The  retail  prices  of  energy  are  fixed  at  a  level 
below  cost,  which  is  expected  to  lead  to  large 
losses in the mostly state-owned  utility sector. 

The  forecast  assumes  capital  injections  to 
those companies amounting to 1.1% of GDP in 
2022  and  a  further  0.7%  in  2023.  Other 
measures in response to the high energy prices 
are set to reach 0.1% of GDP in 2022. 

Public  debt  is  projected  to  decrease  slightly 
from 76.8% of GDP in 2021 to 76.4% in 2022, 
before  falling  to  76.1%  in  2023.  High  nominal 
is  set  to  support  the  debt-
GDP  growth 
largely  offset  high 
consolidation  and  will 
headline  deficits.  The  worsening  financing 
conditions  and  a 
low  average 
maturity of public debt are forecast to increase 
the  debt-servicing  costs  substantially,  from 
2.3% of GDP in 2020 to 3.0% in 2023. 

relatively 

In  the  absence  of  a  Council  Implementing 
Decision approving Hungary’s RRP, this forecast 
builds  on  the  technical  assumptions  and 
includes  expenditures  to  be  financed  by  RRF 
grants, amounting to 0.6% in 2022 and 0.8% in 
2023.  

Risks  to  the  fiscal  outlook  remain  high  due  to 
the  uncertain  evolution  of  nominal  GDP, 
stronger-than-expected spending pressures and 
uncertainty  about  the  government’s  policy 
response to rising energy prices. 

111 

bn HUFCurr. prices% GDP02-1720182019202020212022202355256.7100.02.15.44.6-4.57.13.62.626616.548.21.75.15.0-1.24.64.82.511312.720.51.71.84.3-0.93.7-0.50.014986.627.12.216.312.8-7.05.90.91.244941.881.37.35.05.4-6.110.34.95.944522.380.66.57.08.2-4.08.73.84.653526.596.92.25.56.0-4.56.63.42.71.86.56.5-2.64.62.51.5-0.30.10.10.01.10.10.00.6-1.2-2.0-1.81.41.01.00.62.31.1-1.12.01.70.6Unemployment rate (a)7.63.63.34.14.13.84.04.86.46.93.09.28.76.53.33.33.46.64.06.74.510.815.114.815.517.514.714.43.84.84.86.36.95.64.63.82.93.43.45.29.04.1-0.3-1.00.52.0-3.6-4.40.5-0.1-1.7-2.5-0.9-2.5-5.5-4.3-3.10.0-0.8-1.1-2.9-5.5-3.5-4.8-2.1-2.1-7.8-6.8-6.0-4.9-2.6-3.8-3.8-6.2-6.6-5.8-4.470.569.165.579.676.876.476.1Private ConsumptionTable II.24.1:Main features of country forecast - HUNGARY2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
           
 
 
25.  POLAND 

Poland’s  economic  growth  is  expected  to  be  impacted  by  Russia’s  war  of  aggression  against 
Ukraine.  Higher  uncertainty, trade  disruptions, strong inflationary pressures and  monetary policy 
tightening are set to curb GDP growth, which is expected to decelerate to 3.7% in 2022 and 3.0% 
in 2023. After the improvement of public finances in 2021, the costs related to the war will also 
weigh on Poland’s fiscal position, pushing the deficit to 4.0% of GDP in 2022. 

Poland  entered  2022  on  a  strong  economic 
footing… 

The  lifting  of  pandemic-related  restrictions  led 
to  a  swift  recovery  of  economic  activity  in 
2021, leaving real GDP growth at 5.9%. Despite 
Russia’s  war  of  aggression  against  Ukraine, 
hard data suggests that the economy continued 
on a strong growth path in the first  quarter of 
2022. Growth of industrial production and retail 
sales  stood  well  above  10%  in  March  in  year-
on-year terms, driven by a recovery in Poland’s 
main 
trading  partners  and  a  favourable 
situation in the labour market, which supported 
private  consumption.  Overall,  real  GDP 
is 
forecast  to  grow  by  1.0%  q-o-q  in  the  first 
quarter of 2022. 

… but the war has clouded the outlook 

The war is projected to have a sizeable  impact 
on economic activity over the forecast horizon, 
mainly through a drop in sentiment, a collapse 
in trade with Russia and Ukraine, and increased 
inflation, which weighs on purchasing power. In 
particular,  higher  uncertainty  about 
the 
economic  outlook  and  elevated  inflation  are 
expected  to  lower  households’  propensity  to 
spend,  although  the  large  inflow  of  people 
fleeing  from  Ukraine  will  provide  a  boost  to 
these 
consumption  and  somewhat  offset 
in 
factors.  Private 

investment,  particularly 

112 

investment, 

too,  especially 

equipment,  is  expected  to  remain  subdued  in 
the  remainder  of  2022,  as  lower  confidence 
results in a postponement of firms’ investment 
decisions.  Elevated  cost  pressures  and  rising 
interest  rates  are  expected  to  have  a  negative 
in 
impact  on 
construction. On the external side, the collapse 
in trade with Russia and Ukraine is set to weigh 
on  export  and  import  growth.  Still,  weaker 
domestic demand and a projected depreciation 
of  the  zloty  should  also  have  a  significant 
impact  on 
leading  to  a  positive 
contribution  of  net  exports  to  growth  in  2022 
and 2023. All in all, real GDP growth is forecast 
to reach 3.7% in 2022 and 3.0% in 2023. 

imports, 

Employment growth to continue 

in  2022.  Nevertheless, 

After  an  extraordinary  performance  of  the 
labour market in 2021, job creation is expected 
to  continue 
the 
unemployment rate will likely increase to 4.1% 
in  2022  due  to  the  assumed  large  inflow  of 
people  fleeing  from  Ukraine  into  the  labour 
force  and  their  relatively  lower  employment 
rate.  Wage  growth 
is  projected  to  keep 
gathering  pace  in  2022  driven  by  a  minimum 
wage hike and increasing inflation expectations, 
which will likely lead to higher wage  demands. 
At  the  same  time,  the  tightening  of  monetary 
policy and the increase in labour supply should 
gradually  soften  wage  pressures  towards  the 
end  of  the  forecast  horizon.  As  a  result,  after 
reaching  9.5% 
is 
expected to decelerate to 8% in 2023. 

in  2022,  wage  growth 

Inflation to accelerate strongly in 2022 

Rising commodity prices, booming demand and 
supply-side  bottlenecks  have  contributed  to  a 
steady  and  marked  rise  in  HICP  inflation  in 
recent  months.  Despite  a  number  of  policy 
measures introduced to lower tax rates paid on 
certain  goods,  strong  price  dynamics  are 
forecast  to  persist  in  2022,  mainly  due  to 
surging  global  energy  and  food  prices,  which 

-6-4-20246814151617181920212223Graph II.25.1: Poland -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
Non-EA Member States, Poland 

from Russia’s invasion of Ukraine are expected 
to lead to a significant deterioration of Poland’s 
fiscal position in 2022. The general government 
deficit is estimated to increase to 4.0% of GDP 
in  2022,  driven  by  the  cost  of  aid  to  people 
fleeing  from  Ukraine  and  higher 
interest 
expenditure  as  well  as  temporary  measures 
adopted  in  response  to  the  high  energy,  food 
and  farm  production  prices.  Meanwhile,  the 
COVID-19  related  measures  are  scheduled  to 
be fully withdrawn in 2022. A major tax reform 
introduced in 2022  – the  so-called Polish Deal 
–  will  substantially  decrease  revenue  from 
income taxes, mainly due to the lowering of the 
basic  personal  income  tax  rate.  However,  high 
nominal  GDP  growth  is  expected  to  increase 
revenues from taxes on production and have a 
positive impact on the fiscal ratios. 

line  with 

In  2023,  the  public  deficit  is  projected  to 
increase to 4.4% of GDP. While the energy and 
inflation  compensation  measures  are  assumed 
to  be  withdrawn,  the  costs  of  hosting  people 
fleeing from Ukraine are set to increase further 
in 
the  horizontal  assumptions, 
increasing  the  deficit  by  0.8%  of  GDP.  In  line 
with 
forecast 
includes  expenditure  financed  from  the  RRF  in 
2022  and  2023.  Due  to  high  nominal  GDP 
growth,  public  debt  is  set  to  remain  on  a 
declining  path  through  the  forecast  period: 
from 54% of GDP in 2021 to 50% in 2023. 

technical  assumptions, 

the 

are likely to increase further following the war. 
Rising  unit 
labour  costs  and  supply-chain 
disruptions  are  also  expected  to  put  upward 
pressure  on  core  inflation,  especially  in  2022. 
HICP  inflation  is  thus  expected  to  continue 
increasing  strongly  and  to  peak  in  2022-Q3, 
leaving  the  annual  inflation  rate  at  11.6%  in 
2022.  Inflation  is  then  projected  to  decelerate 
to  7.3%  in  2023  due  to  an  easing  of  global 
commodity prices, wage pressures and supply-
chain disruptions.  

Russia’s  unprovoked  invasion  of  Ukraine  has 
led  to  a  significant  deterioration  of  the  risk 
balance.  A  stronger-than-expected  increase  in 
precautionary  savings,  coupled  with  elevated 
inflation,  could  constrain  private  consumption. 
supply 
Furthermore, 
chain 
longer-lasting 
disruptions  could  negatively 
impact  export 
growth,  exacerbating  cost  pressures  and 
weighing on economic activity.  

War-related costs to impact public finances 

The  lower-than-forecast  deficit  in  2021  sets 
the ground for the current fiscal projections. In 
the  autumn  forecast,  the  general  government 
deficit  was  expected  at  3.3%  of  GDP  in  2021 
while it turned out at 1.9% of GDP, thanks to a 
substantial  decrease  in  public  expenditure  and 
windfall revenues caused by the recovery.  

The  adverse  economic  developments  resulting 

113 

bn PLNCurr. prices% GDP02-172018201920202021202220232622.2100.03.85.44.7-2.25.93.73.01480.756.53.34.53.9-2.86.04.83.7489.018.72.73.56.54.93.41.31.8434.016.64.09.46.1-4.93.84.13.91592.960.77.66.95.20.011.85.53.91473.856.26.97.43.0-1.115.95.73.82540.396.93.55.44.8-1.66.54.12.93.44.94.5-1.64.73.63.10.20.4-1.0-1.12.40.0-0.20.20.01.30.6-1.20.10.10.90.50.00.01.50.40.3Unemployment rate (a)11.83.93.33.23.44.13.93.98.17.35.65.09.58.00.93.22.47.90.66.05.14.81.62.98.84.43.94.02.11.23.24.25.810.07.82.01.22.13.75.211.67.30.6-1.21.53.2-1.5-3.90.5-2.7-1.20.32.4-0.1-2.4-2.1-3.3-1.00.83.31.6-0.5-0.2-4.2-0.2-0.7-6.9-1.9-4.0-4.4-2.2-1.5-2.3-5.9-1.8-4.0-4.049.748.845.657.153.850.849.8Private ConsumptionTable II.25.1:Main features of country forecast - POLAND2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
     
 
 
26.  ROMANIA 

After robust growth in 2021, Romania’s economy is set to slow  down to  2.6% in  2022 as high 
inflation  erodes  disposable  income  and  Russia’s  war  of  aggression  against  Ukraine  affects 
economic  sentiment,  supply-chains  and  ultimately  investment.  Growth  is  projected  to  pick  up 
slightly in 2023, when inflation is set to come down. Unemployment is projected to stay around 
5.5% while price levels growth will peak this year and gradually reduce over 2023. The general 
government deficit is forecast to reach 7.5% of GDP in 2022 before decreasing to 6.3% in 2023, 
bringing the debt-to-GDP ratio up to 52.6% by 2023. 

The war deepens the momentum loss 

Overall, real GDP is forecast to grow by 2.6% in 
2022 and 3.6% in 2023. 

the  end  of  2021 

In early 2022 Romania’s economy was already 
showing  signs  of  momentum  loss,  as  high 
reduced 
inflation  at 
purchasing  power  and  private  consumption. 
This  trend  has  been  aggravated  by  Russia’s 
invasion  of  Ukraine,  which  further 
lifted 
inflation  and  hampered  economic  sentiment, 
while adding to supply bottlenecks.  

Against  this  backdrop,  private  consumption  is 
set  to  grow  only  moderately  in  2022,  before 
picking  up  somewhat  in  2023  when  inflation 
slows  down.  Despite  increasing  interest  rates, 
supply  shortages  and  higher  prices 
for 
construction  materials,  gross  fixed  capital 
formation is forecast to grow at 4.8% for 2022 
thanks  to  support  from  the  RRP,  which  is  also 
expected  to  be  the  main  driver  for  investment 
in 2023.  

in 

Following  a  strong  recovery  of  both  imports 
and  exports  in  2021,  trade  in  goods  and 
services  is  set  to  be  subdued  in  2022  and 
2023.  Import  growth  should  slow  in  line  with 
domestic  demand,  whereas  export  growth,  in 
particular 
is 
the  automotive 
expected  to  be  negatively  affected  by  supply 
bottlenecks. The overall net exports contribution 
to  real  GDP  is  forecast  to  be  close  to  zero. 
However,  high  prices  of  imported  commodies 
such as energy and food are set to worsen the 
current  account  deficit,  which  is  projected  to 
peak at 7.5% in 2022(39). 

industry, 

(39)  Figures  are  based  on  the  Commission  services’ 
calculations using the latest published available data. 

114 

Employment  creation  in  line  with  economic 
growth 

After the initial pandemic shock, unemployment 
rate  gradually  moved  during  2021  towards  its 
2019  levels.  The  trend  continued  this  year, 
despite some upticks in the winter months, and 
unemployment  rate  is  set  to  reach  5.5%  in 
2022  and  5.3%  in  2023.  Total  employment  is 
set  to  grow  modestly  given  the  demographic 
trends  and  the  low  stock  and  slow  integration 
of  people  fleeing  Ukraine,  Romania  being 
mainly a transit country. Nominal private sector 
wages  are  forecast  to  increase  in  line  with 
inflation, whereas those in the public sector are 
set to rise less following a freeze in 2021.   

Inflation to mark record highs 

The  surge  in  energy  prices  that  started  at  the 
end  of  2021  has  passed-through  into  core 
inflation  components  such  as  processed  food, 
services  and  industrial  goods.  This  trend  is 
expected  to  be  aggravated  by  the  additional 
push  on  energy  and  selected  food  and 
commodity prices following Russia’s invasion of 
Ukraine.  Overall,  HICP  is  set  to  reach  8.9%  in  
2022 before falling somewhat to 5.1% in 2023 
when base effects are supposed to kick in. 

-8-6-4-2024681014151617181920212223Graph II.26.1: Romania -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
 
                                                        
          
Non-EA Member States, Romania 

Risks to macroeconomic forecast 

Risks are mainly on the downside for economic 
growth  and  viceversa  for  the  inflation,  as  the 
situation depends very much on the length and 
the severity of the conflict, as well as on global 
trade  frictions.  Still,  there  are  also  risks  to  the 
upside,  as  gross  fixed  capital  formation  might 
be  positively  impacted  by  productive  process 
relocations  from  Ukraine  and  Russia, while  the 
labour  market  could  integrate  more  people 
fleeing Ukraine than initially asumed.  

Public deficit to remain elevated 

is 
Romania’s  general  government  deficit 
forecast  to  increase  to  7.5%  of  GDP  in  2022, 
from 7.1% in 2021. Several factors are behind 
this  expected  rise:  the  2022  budget  already 
contained  new  expenditure  measures  (mainly 
increasing social expenditure, e.g., pensions and 
children  allowance),  a  higher  interest  burden 
due  to  rising  interest  rates  and  lower  social 
security  contributions.  In  addition,  Romania 
adopted  a  compensation  scheme  to  deal  with 
the  surge  in  energy  prices  until  March  2023, 
and provides support to people fleeing Ukraine. 
A  new  set  of  social  and  economic  measures 
was announced on 11 April 2022, which based 
on  the  available  information,  would  have  a 
negative  budgetary  impact  of  0.4%  of  GDP. 
Overall  fiscal  revenues  are  forecast  to  benefit 
from  high  nominal  GDP  growth  and  from  the 

effects of the tax administration reform on tax 
collection contained in the RRP, partly offsetting 
the upward pressures on deficit.  

The deficit is forecast to fall to around 6.3% of 
GDP in 2023, mainly due to the discontinuation 
of  the  energy  support  measures,  and  to  the 
effect of automatic stabilisers as real economic 
growth should accelerate. Capital expenditure is 
expected to grow at a sustained pace thanks to 
the  implementation  of  the  RRP,  which  entails 
capital  expenditure  of  0.3%  of  GDP  in  2022 
and  0.4%  in  2023,  and  of  other  nationally-
financed 
investments,  as  well  as  to  the 
announced  increase  in  defence  expenditure  by 
0.5 percentage points of GDP as from 2023. 

The  general  government  debt  is  projected  to 
rise  to  50.9%  of  GDP  in  2022,  and  52.6%  in 
2023, mainly due to high deficits.   

Risks  to  the  fiscal  forecast  are  tilted  to  the 
downside.  Details  on  the  measures  announced 
on  11  April  2022  might  result  in  a  higher 
budgetary  impact  while  the  tax  administration 
reform  could  have  a 
larger-than-expected 
positive impact on tax collection. 

115 

bn RONCurr. prices% GDP02-172018201920202021202220231181.9100.04.04.54.2-3.75.92.63.6736.562.35.87.73.9-5.17.92.93.5206.117.40.23.37.31.80.40.1-0.1285.024.15.8-1.112.94.12.34.88.1482.840.810.85.35.4-9.412.54.55.2549.746.512.28.68.6-5.214.65.05.31164.198.53.94.04.7-4.16.12.73.85.75.16.5-2.05.53.04.3-0.31.0-0.6-0.31.80.1-0.3-1.3-1.6-1.6-1.5-1.4-0.5-0.4-1.30.10.1-1.8-8.90.80.8Unemployment rate (a)8.55.34.96.15.65.55.311.712.910.92.65.78.37.06.08.26.64.7-9.06.44.1:::::::8.96.26.83.95.49.54.96.34.13.92.34.18.95.12.10.62.13.20.8-0.2-0.5-9.8-7.5-8.0-8.7-9.6-10.4-10.8-5.5-4.4-5.3-5.8-7.0-7.5-7.3-3.1-2.8-4.3-9.3-7.1-7.5-6.3-1.5-3.1-4.9-7.8-6.3-6.5-5.426.734.735.347.248.850.952.6Private ConsumptionTable II.26.1:Main features of country forecast - ROMANIA2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Notes: Due to a break in historical employment data in 2021, employment-related  variables have been affected (employment, unemployment as well as  cyclically-adjusted and structural fiscal indicators).Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
                 
 
 
27.  SWEDEN 

Economic growth in Sweden is set to pick up in the second half of 2022 after a weak start due to 
Russia’s  war  of  aggression  in  Ukraine,  the  erosion  of  purchasing  power,  cost  increases  due  to 
inflation, and continuing supply bottlenecks. The recovery is expected  to remain muted in 2023, 
driven  by  private  consumption  and  exports.  Inflation  is  set  to  increase  to  5.3%  on  average  for 
2022,  falling  back  to  3%  in  2023.  Fiscal  policy  supports  the  economy  in  2022  with  sizeable 
expenditure  measures  to  improve  health  care,  address  the  surge  in  inflation  and  counter  the 
consequences of  the war. The general government balance is expected  to turn from a  deficit of 
0.5% of GDP in 2022 into a surplus of similar size next year. The public debt-to-GDP ratio is set 
to fall to just above 30% of GDP in 2023. 

Recovery to stall temporarily  

robust 

At  the  beginning  of  2022,  the  Swedish 
economy  was  poised  for  a  healthy  recovery, 
including  a 
underpinned  by  fundamentals, 
corporate 
labour  market, 
strong 
profitability  and  healthy  exports  orders. 
However,  as  the  pandemic  subsided,  the 
economy  started  to  be  negatively  affected  by 
the  outbreak  of  the  war  in  Ukraine,  which 
further 
negative 
consequences  for  household  purchasing  power 
and  costs  to  businesses.  It  also  aggravated 
supply  bottlenecks  linked  to  the  reversal  of 
supply  improvement  from  Asia,  as  well  as 
induced  lower  confidence  among  households 
and businesses.  

inflation  with 

lifted 

as support  measures  are  scaled  down.  Exports 
are  on  track  for  a  recovery  this  year  and  in 
2023,  reflecting  order  backlogs  and  overall 
healthy  profitability  and  competitiveness  of 
exporting  firms  whereas  private  consumption 
growth  is  projected  to  slow  in  2023.  Overall, 
real  GDP  is  forecast  to  grow  by  2.3%  in  2022 
and 1.4% in 2023. 

Resilient labour market supports growth 

is  expected 

labour  market.  While 

The  Swedish  labour  market  proved  resilient 
during  the  pandemic  and  strong  employment 
in  2022,  moderating 
growth 
somewhat  in  2023.  The  combination  of  very 
high 
labour  shortages  and  still  elevated 
unemployment  indicates  matching  problems  in 
the 
long-term 
further 
remains 
unemployment 
adjustments  would  allow  the  unemployment 
rate  to  decrease  to  7% 
in  2023.  Wage 
increases are expected to remain in line with a 
relative  wage 
long-standing  pattern  of 
moderation.  The  next  round  of  collective  wage 
bargaining, the results of which will be in place 
as  from  March  2023,  is  set  to  show  a  limited 
pick-up in wage growth. 

high, 

Real GDP growth is set to be positive for 2022 
as a whole. Private consumption is expected to 
expand  despite  elevated  inflation,  due  to  a 
decline  in  the  household  saving  ratio  and 
supportive 
labour  market.  Meanwhile, 
investment  growth  is  set  to  continue,  albeit 
dampened  by  uncertainty,  supply  constraints 
and  tightening  credit  conditions.  Fiscal  support 
would  continue  in  2022.  In  2023  government 
consumption should moderate real GDP growth 

Broad-based inflation to recede only slowly 

HICP  inflation  reached  2.7%  in  2021,  initially 
pushed  up  by  energy  prices,  in  particular  for 
electricity.  Thereafter,  it  increased  markedly  in 
the  first  quarter  of  2022,  as  energy  inflation 
stayed  at  around  26%,  while  price  increases 
broadened across a wide range of items in the 
consumer  basket,  spurred  by  a  sharp  increase 
in  input  costs  for  firms.  In  March  2022,  HICP 
inflation  was  6.3%,  the  highest  rate  on  record 
since the harmonised consumer price index was 
first published in 1996. Base effects are set to 
from  end-2022  onwards, 
lower 

inflation 

116 

-4-2024614151617181920212223Graph II.27.1: Sweden -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
       
especially 
for  energy.  However,  headline 
inflation  would  continue  to  mirror  the  pass-
through  of  higher  production,  energy  and 
transport  costs  to  consumer  prices.  Overall 
HICP  inflation  is  expected  to  average  5.3%  in 
2022 and 3% in 2023. 

Fiscal  expenditure  to  support  economy  in 
2022 

The general government balance is expected to 
move from a 0.5% of GDP deficit in 2022 to a 
surplus  of  0.5%  of  GDP  in  2023.  In  2022, 
weaker  economic  growth  and  additional 
spending more than offsets the phasing out of 
the 
most 
revenue  impact  of  higher  inflation.  In  2023, 
temporary fiscal support measure notably with 
regard  to  energy  and  the  pandemic  are  set  to 
expire thus strengthening the balance.  

COVID-measures, 

outweighing 

The  spending  increases  of  the  2022  spring 
amending  budget  bill,  taken  together  with  the 
already  adopted  2022  amending  budgets, 
amount  to  around  1.3%  of  GDP  in  total.  The 
amending  budgets  contain  measures 
to 
compensate households and, in particular, the  

Non-EA Member States, Sweden 

agricultural  sector  for  increases  in  energy 
prices  (energy  tax  deductions  as  well  as  an 
is 
electricity  allowance).  Defence  spending 
expected  to  continue  to  increase  over  the 
coming  years.  Substantive  emergency  aid  to 
Ukraine has already been approved while costs 
related  to  those  fleeing  from  Ukraine  will  be 
offset through the foreign aid budget in 2022. 
Further expenditure measures include increased 
old-age  pensions  for  those  with  the  lowest 
pensions,  an  increased  housing  allowance  for 
families  with  children,  continuation  of  the 
bonus  for  cars  with  low  CO2  emissions  and 
compensation to employers for higher sick pay 
costs.  

The  public  debt-to-GDP  ratio  is  set  to  resume 
its  downward  path  and fall  to  just  above  30% 
of  GDP  in  2023.  This  reflects  the  combination 
of  sizeable  nominal  GDP  growth,  and  the 
stepwise  debt-reducing 
repayment  of  a 
Riksbank  loan  for  foreign  currency  reserves 
over 2021-2023, equivalent to around 3½% of 
GDP. 

117 

bn SEKCurr. prices% GDP02-172018201920202021202220235381.3100.02.32.02.0-2.94.82.31.42357.343.82.41.80.7-4.75.83.21.51411.526.21.30.80.3-1.32.80.8-3.01358.225.23.01.4-0.3-0.36.12.02.52489.246.33.54.26.0-4.67.54.13.12255.041.93.73.82.1-5.69.44.51.85541.5103.02.42.23.0-2.44.21.91.32.21.40.3-2.54.82.10.60.00.3-0.1-0.70.40.10.10.10.31.80.2-0.40.00.70.81.60.6-1.31.32.10.9Unemployment rate (a)7.36.57.08.58.87.87.03.13.83.02.54.32.73.71.73.51.54.30.82.63.211.916.218.220.519.316.515.21.62.42.51.83.04.33.91.42.01.70.72.75.33.0-0.1-1.01.10.90.4-1.70.24.92.53.94.74.54.24.95.32.65.26.15.54.85.80.20.80.6-2.7-0.2-0.50.50.20.60.4-0.40.50.01.242.638.934.939.636.733.830.5Private ConsumptionTable II.27.1:Main features of country forecast - SWEDEN2021Annual percentage changeGDPPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services)GNI (GDP deflator)EmploymentContribution to GDP growth:Compensation of employees / headUnit labour costs whole economySaving rate of households (b)Domestic demandInventoriesNet exportsGDP deflatorHarmonised index of consumer pricesGeneral government gross debt (c) (a) Eurostat definition.  (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.Terms of trade goodsTrade balance (goods) (c)Current-account balance (c)General government balance (c)Structural budget balance (d) 
 
 
   
 
 
Candidate Countries 

 
 
 
28.  ALBANIA 

A  stronger-than-expected  economic  recovery  driven  by  a  quick  rebound  of  tourism  from 
neighbouring  countries,  as  well  as  by  high  investment  growth  and  a  recovery  of  private 
consumption,  boosted  growth  to  8.5%  in  2021.  For  2022  and  2023  growth  is  expected  to  be 
2.7%  and  3.1  %  respectively,  mainly  affected  by  the  impact  of  Russia’s  invasion  of  Ukraine, 
although only indirectly as Albania has little direct exposure to both countries. Increasing food and 
energy  prices  have  prompted  the  government  to  provide  additional  support  to  households  and 
SMEs, which is set to postpone to 2023 a more significant improvement in government finances. 

A stronger-than-expected recovery in 2021 

and 

than 

private 

investment, 

expenditure 

The Albanian economy grew by 8.5% last year, 
according  to  preliminary  data,  almost  2  pps. 
the  Autumn  2021  Forecast 
higher 
projection.  Most 
categories 
exceeded  their  2019  levels,  driven  by  both 
private 
public 
consumption  and  external  demand.  Public 
investment  and  a  stable  and  liquid  financial 
sector  supported 
the  exceptionally  strong 
investment  growth.  Growing  employment  and 
increasing  wages  fuelled  private  consumption 
beyond  pre-crisis  levels.  While  goods  exports, 
mainly  electricity  and  construction  material,  
more  than  recovered  the  ground  lost  in  2020, 
services  exports,  although  benefitting  from 
growing  inbound  tourism  from  neighbouring 
countries,  still  remained  slightly  below  their 
pre-pandemic 
and 
consumption  growth  drove  the  rise  in  goods 
imports,  leading  to  a  strongly  negative  growth 
contribution of net exports in 2021.  

Investment 

level. 

Normalisation  of  growth  dampened  by 
uncertainty about the external environment 

these  disruptions, 

Following the strong recovery of most demand 
components  in  2021,  expectations  of  a  return 
to  the  over  3%  historical  average  growth  rate 
are dampened by the impact of the war on the 
main  EU  trading  partners,  supply  chains  and 
the 
commodity  prices.  Uncertainty  about 
economic  effect  of 
in 
addition  to  the  likely  tightening  of  financing 
conditions, is expected to subdue the growth of 
private  consumption  and  investment.  Public 
investment,  in  particular  the  completion  of  the 
post-earthquake reconstruction, will continue to 
support the economy, but less than planned as 
public  expenditure  of  about  1.5%  of  GDP  has 
been reoriented to subsidise electricity and fuel, 
as  well  as  increased  social  support.  Subdued 
is  expected  to  dampen 
domestic  demand 

120 

import  growth.  On  the  other  hand,  tourism, 
which  mainly  depends  on  regional  and  EU 
tourists, is projected to continue supporting the 
growth of services exports, which is set to turn 
the  contribution  of  net  exports  to  growth 
slightly  positive.  Overall,  economic  growth  is 
forecast  at  2.7%  in  2022  and  3.1%  in  2023. 
This slowdown and increasing wages are likely 
to  moderate  employment  growth  in  2023. 
However, driven by recent labour shortages, the 
unemployment  rate  is  expected  to  decline  to 
below 11% by 2023.  

This outlook is subject to downside risks, mainly 
related  to  the  impact  of  a  lasting  energy  price 
hike  coupled  with  low  domestic  hydroelectric 
production  due  to 
insufficient  rainfall,  as 
already seen in 2022-Q1. In this case, Albania’s 
electricity 
increase 
substantially, and could, in addition to widening 
the trade deficit, overburden the public budget, 
which has so far covered the price gap between 
high  external  import  prices  and  the  regulated 
domestic prices for households and SMEs.  

bill  would 

import 

Rising commodity prices weigh on the current 
account deficit 

A  strongly 
combination  with 

increased  services  balance, 

in 
remittances, 

rebounding 

-8-3271214151617181920212223Graph II.28.1: Albania -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
     
In  2022, 

in  goods 

reduced the current account  deficit by 1  pp. to 
7.7%  of  GDP  in  2021,  despite  an  increasing 
rising 
trade. 
deficit 
commodity import prices are projected to widen 
even  further  the  merchandise  trade  deficit, 
which  is  forecast  to  increase  the  current 
account deficit to 8.3% of GDP in 2022 before 
slightly  improving  in  2023,  helped  by  a  higher 
GDP denominator.  

Monetary policy is set for normalisation 

The  central  bank  continued  to  support  the 
economy with its record low policy rate of 0.5% 
until March 2022, when it raised the rate to 1% 
as  a  first  step  towards  a  gradual  policy 
normalisation,  in  response  to  increasing  price 
pressures.  Inflation  is  projected  to  exceed  the 
central  bank’s  3%  target  by  almost  2pps.  in 
2022. For 2023, imported inflation is expected 
to  subside  but  domestic  upward  pressure  is 
forecast  to  keep  the  inflation  rate  above  the 
target level at 3.5%.  

Candidate Countries, Albania 

Government 
pressure 

finances 

to 

remain  under 

Benefitting  from  the  high  GDP  growth  and 
lower  public  investment  than  planned,  public 
deficit  and  debt  ratios  turned  out  2  pps.  lower 
than  expected  in  2021,  despite  a  Eurobond 
issuance  for  pre-financing  the  2022  budget 
balance.  The  high  cost  of  subsidies  and 
increased social support expected for 2022 will 
delay  a  substantial  reduction  of  the  deficit,  to 
2.7%  of  GDP,  to  2023,  when  the  debt  ratio  is 
projected to decrease to 70.9% of GDP.  

121 

607080-8-6-4-2014151617181920212223% of GDPGross debt (rhs)Budget balance (lhs)forecast% of GDPGraph II.28.2: Albania -General government budget balance and gross debtbn ALLCurr. prices% GDP02-172018201920202021202220231890.3100.04.04.02.1-3.58.42.73.11420.075.14.43.23.3-3.74.33.03.3222.211.82.30.72.91.58.2-4.1-4.7455.924.12.62.3-3.6-1.119.93.13.4578.730.68.94.02.7-27.746.64.85.4829.943.95.12.42.3-19.231.62.93.21864.498.63.83.60.9-3.88.72.73.14.83.22.1-3.09.02.52.8-0.50.60.2-0.40.40.00.0-0.30.2-0.20.0-1.20.20.3:2.12.4-1.91.51.81.6Unemployment rate (a)16.512.812.012.211.911.510.8:::::::::::::::::::::2.51.51.30.76.13.52.92.62.01.41.62.04.93.5-1.34.0-2.8-9.82.8-1.5-0.8-24.5-22.3-22.8-22.5-24.8-26.1-26.4-10.9-6.8-7.9-8.6-7.7-8.3-7.9-7.0-1.7-1.9-6.8-4.6-4.2-2.7:::::::64.567.765.874.573.172.470.9Structural budget balance (d)General government gross debt (c) (a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.General government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer price indexTerms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.28.1:Main features of country forecast - ALBANIA2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
     
 
 
 
     
 
 
29.  MONTENEGRO 

A  quicker  than  expected  resumption  of  tourism  resulted  in  a  strong  rebound of  the  economy  in 
2021. Tourism activity in Montenegro is however set to slow down in 2022 due to Russia’s war of 
aggression against Ukraine, as Russians and Ukrainians constitute a significant share of visitors. 
At the same time, an ambitious economic reform programme adopted by the government at the 
end of 2021 is projected to boost households’ purchasing power and investment. This stimulus is 
set to add further inflationary pressures and to increase external and budget deficits. 

Strong rebound of the economy in 2021 

An ambitious initiative not exempt from risks 

Montenegro’s  economy  recorded  very  strong 
growth  in  2021,  surging  by  12.4%  y-o-y,  but 
did  not  fully  recover  to  pre-pandemic  levels. 
Net  exports  were  the  main  driver  of  growth  in 
2021, led by a robust revival of tourism, which 
had  positive  spillover  effects  across 
the 
consumption. 
economy, 
increased  only 
Government 
moderately,  as  COVID-19-related 
support 
measures started to expire. Investment activity 
remained  weak  for  a  second  year  in  a  row, 
declining by 10% y-o-y. 

consumption 

boosting 

private 

At  the  end  of  2021,  the  government  adopted 
an  ambitious  plan  (Europe  Now)  to  boost 
economic  recovery.  This  included  the  abolition 
of health contributions, an 80% increase in the 
minimum  wage,  the  introduction  of  new  social 
benefits  and  an  ambitious  public  investment 
programme. This major fiscal stimulus is set to 
boost  households’  income,  employment  and 
investment.  However,  while  the  increase  of 
salaries  is  projected  to  preserve  households’ 
it  also  risks 
purchasing  power  this  year, 
nourishing  inflationary  pressures  as  well  as 
increasing external and fiscal imbalances. 

Overall,  this  scenario  is  subject  to  major 
downside risks in case the economy grows less 
than  expected  in  an  environment  of  global 
tightening,  which  would  hinder 
financial 
investments 
and 
consequently, public finances. 

employment, 

and 

Challenging circumstances in 2022 

The  optimistic  autumn 
forecast  baseline 
outlook has been upturned by a triple shock. In 
early  2022,  food  and  energy  price  increases 
were  exacerbated  further  by  the  fallout  of 
Russia’s war of aggression against Ukraine. The 
war is also expected to have a negative impact 
on  Montenegro’s  tourism  industry,  as  Russians 
and Ukrainians constitute 20% of total visitors. 
On top of this, a political crisis materialised on 
4  February  2022,  when  the  government  lost  a 
vote  of  confidence  14  months  after  being 
formed.  A  new  minority  government  was 
established  three  months  later,  but  political 
uncertainty persists. 

Growth projections lowered 

Montenegro’s GDP growth projections for 2022 
are  revised  downwards  by  some  2  pps. 
compared  to  the  Autumn  Forecast.  Tourism  in 
particular is expected to perform worse in 2022 
than previously expected and to reduce exports 
of  services,  while  the  fiscal  stimulus  is  set  to 
support  private  consumption  particularly  in 
2022,  before  the  impulse  runs  out  in  2023. 
Weaknesses in public investment management, 
a track record of low implementation rates, and 
delays in forming the new government are set 
to hinder the ambitious public investment  plan 
intensification  of 
for  2022,  albeit  some 
investment  could  be  expected  in  2023  as  the 
preparation  of  several  construction  projects 
mature.  The  economy  is  expected  to  regain 
some  momentum  in  2023,  as  tourism  is 
projected  to  fully  recover  or  surpass  pre-
pandemic  levels.  The  slower  but  sustained 
growth of the economy would be reflected in a 

122 

-18-14-10-6-226101414151617181920212223Graph II.29.1: Montenegro -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
improvement  of 

gradual 
labour  market 
conditions. Employment is expected to increase 
gradually  and  unemployment  rates  to  fall 
below  pre-pandemic  levels  in  2023  as  the 
rebound of tourism supports economic activity. 
Inflation  projections  are  revised  significantly 
upwards.  However,  the  surge  in  inflation  is 
expected to be temporary. Consumer prices are 
assumed to  decelerate gradually as from mid-
2022  as  energy  and  food  prices  are  assumed 
to broadly flatten out, helping headline inflation 
to  return  to  more  moderate  levels  in  2023 
after base effects phase out. 

Following  a  large  improvement  in  2021,  the 
current  account  deficit  is  expected  to  increase 
again  in  2022  due  to  lower  revenues  from 
tourism. The merchandise trade deficit is set to 
widen 
import-dependent 
investment activity intensifies. 

2023, 

as 

in 

External  financing  is  expected  to  continue 
relying  on  FDI  inflows.  However,  the  tightening 
of  global  financial  conditions  and  Russian 
investors’  difficulties 
capital 
(particularly  towards  real  estate)  may  hinder 
capital flows into Montenegro. 

transfer 

to 

Candidate Countries, Montenegro 

Temporary surge of the budget deficit 

in  2023  thanks 

The  rebound  in  economic  activity  combined 
with  a  significant  underspending  of  the  capital 
budget  resulted  in  a  sharp  reduction  of  the 
budget  deficit  in  2021.  The  economy  is  set  to 
benefit from the strong fiscal stimulus provided 
by  the  ‘Europe  Now’  programme,  which  is 
however  expected  to  raise  significantly  the 
budget deficit this year.  The  gap is forecast to 
to  the  stimulus 
narrow 
carryover  provided  to  the  economy,  and  the 
subsequent windfall from indirect and personal 
income taxes, while public spending is expected 
to remain stable in nominal terms. The sizeable 
relieves 
amount  of  government  deposits 
considerably  Montenegro’s  budget  financing 
needs, and therefore, borrowing operations are 
set  to  remain  limited  during  the  forecast 
horizon. The combination of high inflation, GDP 
growth and limited borrowing are set to reduce 
the public debt ratio in both 2022 and 2023. 

123 

mio EURCurr. prices% GDP02-172018201920202021202220234911.6100.03.05.14.1-15.312.43.83.43628.873.9:4.63.1-4.64.32.93.3990.820.2:6.31.00.81.52.11.11116.422.7:14.7-1.7-11.9-10.32.24.22114.243.0:7.05.8-46.281.13.86.33080.062.7:9.22.7-20.113.71.44.85023.1102.3:4.23.2-14.313.2-0.23.44.58.51.9-6.41.03.13.6-0.4-0.31.5-1.0-1.30.00.0-1.2-3.10.7-7.212.70.8-0.2:3.22.6-10.1-2.42.12.3Unemployment rate (a)18.715.515.418.316.915.214.7::::::::::::::::::::::::::::3.02.90.5-0.82.56.52.9:::::::-45.0-43.9-41.7-39.2-39.0-38.8-40.6-22.1-17.0-15.0-26.1-9.2-12.1-12.5-3.0-3.9-1.9-11.1-2.0-4.4-2.2:::::::49.170.174.9103.580.676.772.7Structural budget balance (d)General government gross debt (c) (a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.General government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer price indexTerms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.29.1:Main features of country forecast - MONTENEGRO2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
 
 
        
 
 
30.  NORTH MACEDONIA 

North Macedonia’s economic recovery is expected to lose some momentum in 2022, reflecting a 
deteriorating external environment, but also weaker domestic demand due to increasing domestic 
inflationary  pressures,  and  more  cautious  investment  in  view  of  increased  international 
uncertainty and possible supply chain interruptions. Real GDP growth is projected to slow down to 
3.0%  in  2022,  but  to  accelerate  slightly  to  3.1%  in  2023.  Financing  needs  for  continued 
implementation of anti-crisis measures, in particular to mitigate the impact of high energy prices 
on households and companies, are likely to entail sustained high fiscal deficit levels.  

The economic recovery will moderate in 2022 

rapidly  at 

After a COVID-19 related output drop  by 4.5% 
in  2020,  the  economy  rebounded  by  4%  in 
2021.  The  main  driver  was  domestic  demand, 
in  particular  private  consumption,  but  also 
exports,  which 
the 
recovered 
beginning  of  last  year.  However,  towards  the 
end  of  2021,  growth  dynamics  slowed  down, 
partly  as  a  result  of  weakening  external 
demand  and  a  strong  increase  in  food  and 
energy prices, which brought annual inflation to 
3.2%  in  2021.  Inflows  from  remittances  were 
slightly  weaker  than  a  year  before,  but 
continued  to  bolster  households’  disposable 
incomes.  Investment  was  slightly  above  its 
level  of  one  year  earlier,  but  remained  below 
the outturn of the second half of 2020. Import 
growth  was  rather  strong,  reflecting  solid 
domestic demand. High frequency indicators for 
the  first  two  months  of  2022  send  mixed 
signals  about  the  resilience  of  the  economy  in 
the 
rising  price  pressures  and 
protracted ruptures of supply chains.  

face  of 

from 

recovery 

from  a 

Over the forecast  horizon,  domestic demand is 
projected  to  be  the  main  source  of  growth, 
benefitting 
pent-up  demand  and 
increasing  investment.  Household  spending  is 
expected  to  grow  by  some  3%  in  2022  and 
2023,  benefitting 
in 
remittances  and  from  government  support  to 
employment  and  wages  at  least  throughout 
2022.  Based  on  the  assumption  that  the 
international  environment  will  remain  subdued 
in 2022 and 2023, export growth is expected to 
slow  down  during  the  forecast  period.  Due  to 
less  buoyant 
consumption  and 
investment,  import  growth  will  also  remain 
more  moderate,  leading  to  a  largely  neutral 
growth  contribution  of  net  exports  to  total 
growth.  The  deficit  in  merchandise  trade  is 
likely to narrow as a result of weaker imports.   

private 

124 

Employment growth to accelerate  

After a moderate employment decline in 2020, 
the  number  of  employees  increased  slightly  in 
2021,  in  particular  in  the  second  half  of  the 
year,  benefitting  from  public  employment 
support  measures.  However,  brain  drain 
continues to  be  an  important  issue.  During  the 
forecast  period,  employment  growth 
is 
expected  to  accelerate,  in  particular  in  2023, 
reflecting  higher  investment  and  government 
support to employers.  

Price pressures set to increase markedly 

Inflation  is  projected  to  pick  up  significantly  in 
2022,  mainly  due  to  rising  global  prices  for 
energy  and  food,  and  to  global  supply  chain 
disruptions.  Energy  prices  over  the  forecast 
horizon are expected to track futures and hence 
remain elevated. Spillovers to core inflation are 
already  discernible  in  various  sectors.  Further 
price  pressures  might  arise  from  a  renewed 
push  to  wage  growth,  given  the  18.5%  rise  in 
the minimum wage as of March this year.  

-10-8-6-4-20246814151617181920212223Graph II.30.1: North Macedonia -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
   
Candidate Countries, North Macedonia 

Fiscal consolidation likely to be interrupted in 
2022 

Revenue  increased  by  15.3%  y-o-y  in  2021, 
largely reflecting the phasing out of pandemic-
related  restrictions  and  consumers’  pent-up 
demand.  Current  expenditure 
increased  by 
2.9%  in  2021,  down  from  a  pandemic-related 
increase  of  13.9%  in  the  preceding  year.  The 
general government  deficit turned out at 5.4% 
of GDP, below the revised target of 6.5%.  

to 

the 

account of the government’s March package of 
measures aimed to  cushion the economy from 
the  repercussions  of  higher  energy  and  food 
prices.  The  government  also  pays 
large 
subsidies 
state-owned  electricity 
producer  ESM  to  cover  losses  in  the  regulated 
market.  Moreover,  the  recent  rise  in  minimum 
wages  has  fiscal  implications,  notably  raising 
wage  subsidies.  It  will  also  impact  the  pension 
budget, as the formula for pensions indexation 
has  been  changed  in  order  to  consider  wage 
developments  besides  CPI.  Sustained  high 
deficits make debt stabilisation elusive over the 
forecast  horizon.  General  government  debt  is 
projected to rise further at least until 2023, yet 
to remain below 60% of GDP.  

Risks to the forecast are on the downside 

The  growth  outlook  could  be  challenged  if  the 
Russia-Ukraine conflict aggravates global trade 
and  energy  prices 
further.  A  prolonged 
disruption  of  supply  chains  could  also  impact 
fiscal 
negatively  on  exports.  To  bolster 
sustainability,  the  government  will  need  to 
carefully  calibrate  the  gradual  withdrawal  of 
pandemic-related crisis support, cushioning the 
energy  shock,  and  implementing  its  ambitious 
investment  agenda,  while  resuming  reforms  in 
fiscal  governance  and  in  public  investment 
management.  

The  government’s original target to reduce the 
fiscal deficit to 3.5% by 2023 seems unlikely in 
view  of  an  anticipated  rise  in  financing  needs 
due  to  the  government’s  response  to  the 
energy  crisis.  While  revenue  is  expected  to 
outperform  original  plans,  partly  due 
to 
inflation,  expenditure  may  be  much  higher,  on 

125 

0102030405060-10-8-6-4-2014151617181920212223% of GDPGross debt (rhs)Budget balance (lhs)forecast% of GDPGraph II.30.2: North Macedonia -General government budget balance and gross debtbn MKDCurr. prices% GDP02-17201820192020202120222023723.2100.03.12.93.2-4.54.03.03.1476.365.93.43.73.5-5.65.02.93.1117.716.3-0.91.5-0.810.14.11.40.2129.717.94.4-6.48.0-6.18.04.76.4476.865.97.612.87.2-10.912.35.87.2592.281.97.210.78.9-10.913.94.66.0688.595.22.82.62.4-3.22.93.03.13.51.23.8-3.55.63.03.30.92.01.5-2.71.10.00.0-1.1-0.4-2.11.5-2.80.1-0.11.82.55.1-0.41.10.82.3Unemployment rate (a)31.620.717.316.415.515.315.2:3.37.85.85.68.64.4:2.99.810.52.76.23.6:::::::2.63.91.6-0.86.12.91.91.71.40.81.23.26.73.90.92.2-0.2-0.6-5.8-0.4-0.2-22.4-16.2-17.5-17.0-20.3-21.4-21.2-3.4-0.1-3.3-3.4-3.5-4.1-3.9-1.5-1.1-2.1-8.3-5.4-6.1-4.4:::::::32.640.440.551.951.854.656.4Structural budget balance (d)General government gross debt (c) (a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.General government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer price indexTerms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.30.1:Main features of country forecast - NORTH MACEDONIA2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
   
 
 
      
 
 
31.  SERBIA 

After  a  strong  rebound  by  7.4%  in  2021,  the  Serbian  economy  is  projected  to  expand  more 
moderately  by  3.4%  in  2022  and  by  3.8%  in  2023.  Growth  is  expected  to  be  mainly  driven  by 
private  consumption  and  investment,  but  dampened  by  the  economic  fallout of  Russia’s  war  of 
aggression against Ukraine. Inflation is set to peak in mid-2022 to then decelerate as of autumn 
2022. Supported by a lower volume of fiscal support measures and high nominal GDP growth, the 
general  government  deficit  and  the  debt-to-GDP  ratio,  after  decreasing  to  4.1%  of  GDP  and 
57.1% respectively in 2021, are expected to record further gradual reductions in 2022 and 2023.  

Strong rebound in 2021 

After a  relatively mild contraction in 2020, the 
Serbian economy recorded a strong rebound in 
2021  to  well  above  its  pre-COVID-19  crisis 
level.  Real  GDP  growth  reached  7.4%,  mostly 
driven  by  increases  in  private  consumption, 
gross  fixed  capital  formation  and  public 
consumption that were only slightly offset by a 
negative  contribution  of  net  exports to  growth. 
The  rebound  of  private  consumption  was 
particularly supported by a new fiscal stimulus 
programme  worth  around  2%  of  GDP  and 
additional liquidity support measures of similar 
size.  On  the  supply  side,  the  recovery  was 
chiefly  driven  by  services,  construction  and 
industry. Short-term indicators suggest that the 
expansion  of  economic  activity,  while  slightly 
decelerating,  continued  in  the  first  quarter  of 
2022. Thus, industrial production and real retail 
turnover  increased  by  1.9%  and  10.6%  y-o-y 
respectively in the first three months of 2022. 

Growth  momentum  dampened  by  the  war  in 
Ukraine 

Economic  growth is  projected to reach 3.4% in 
2022,  mostly  driven  by  increases  in  private 
consumption and investment that are expected 
to  outweigh  the  small  negative  contribution  of 
net exports to growth. The economic fallout of 
Russia’s  war  against  Ukraine  is  expected  to 
weigh  on  the  growth  momentum  in  particular 
via  higher  commodity  prices,  impacting  real 
disposable income, and reduced trade dynamics 
with  Serbia’s  main  trading  partners  in  the  EU. 
Under the assumption of a continued high level 
of  geopolitical  tensions,  growth  in  2023  is 
expected  to  remain  below  its  pre-pandemic  
rate  of  somewhat  above  4%.  GDP  growth  in 
2023  is  projected  to  be  mostly  driven  by 
private consumption and investment as well as 
an improving contribution of net exports due to 
increased  export  capacity  supported  by  recent 

126 

foreign direct investment in the tradable sector. 
The  current  account  deficit,  after  a  slight 
increase 
rise 
substantially in 2022, mainly due to the higher 
cost of energy imports, and to broadly stabilise 
in 2023. 

is  expected 

in  2021, 

to 

Unemployment to resume gradual decline 

After a  slight increase in 2021, as the pace of 
return  of  discouraged  workers  to  the  labour 
the  growth  of 
market 
employment, 
is 
expected  to  resume  a  gradual  decline  in  2022 
and 2023. 

the  unemployment 

initially  exceeded 

rate 

Inflationary  pressures  to  decelerate  from 
high levels 

After  accelerating  strongly  since  the  second 
half  of  2021,  mostly  due  to  food  and  energy 
prices,  inflation  reached  9.1%  in  March  2022 
and  is  projected  to  peak  in  the  middle  of  the 
year. It is expected to decelerate as of autumn 
2022 as base effects from lower price levels in 
early 2021 are set to subside, leading average 
annual  inflation  to  stabilise  at  the  level  of  the 
first quarter of 2022 and to return below 5% in 
2023. 

-8-6-4-2024681014151617181920212223Graph II.31.1: Serbia -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
     
Candidate Countries, Serbia 

strong 

government  support  measures,  lower  capital 
spending  and 
revenue 
continued 
performance  from  high  nominal  growth,  the 
deficit is forecast to decrease further to around 
3% of GDP in 2022 and to continue declining in 
2023.  Following  an  increase  by  5  pps  in  2020 
to  57.8%,  the  debt-to-GDP  ratio  has  slightly 
decreased to 57.1% in 2021 as a result of very 
high nominal GDP growth. The ratio is projected 
to continue a gradual decline in 2022 and 2023 
in  line  with  lower public  deficits  and continued 
rather high nominal GDP growth.  

High  uncertainty  and  substantial  downside 
risks 

Given the war in Ukraine, the growth outlook is 
subject to a high level of uncertainty while risks 
appear  to  be  tilted  to  the  downside.  An  even 
stronger  or  more  durable  hike  in  inflation, 
maintaining or exceeding the March 2022 level 
for  a  prolonged  period,  particularly  due  to 
continued  pressure  from  energy  and  food 
prices,  could  further  weaken  purchasing  power 
and  thereby  weigh  on  real  growth  more  than 
currently  anticipated.  A  protracted  impact  of 
supply-side  bottlenecks,  particularly  in  the  EU, 
could  dampen  net  exports  as  compared  to  the 
increased 
baseline.  On 
nearshoring of production could have beneficial 
effects  on  foreign  direct 
investment  and 
exports. 

the  other  hand, 

Deficit and debt levels on a downward path 

After reaching 8.0% of GDP in 2020, mostly as 
a  result  of  COVID-19-crisis-mitigating  fiscal 
support  measures,  the  general  government 
deficit dropped to 4.1% of GDP in 2021 on the 
back  of  lower  fiscal  support  measures,  strong 
revenue  performance in line with  high nominal 
growth and deferred tax payments, and despite 
substantial 
capital 
spending.  

increases 

further 

in 

In 

line  with  a 

lower  overall  volume  of 

127 

01020304050607080-10-8-6-4-20214151617181920212223% of GDPGross debt (rhs)Budget balance (lhs)forecast% of GDPGraph II.31.2: Serbia-General government budget balance and gross debtbn RSDCurr. prices% GDP02-172018201920202021202220236268.7100.03.14.54.3-0.97.43.43.84100.765.42.83.13.7-1.97.63.73.81052.516.81.73.71.92.82.70.10.71409.522.56.417.517.2-1.912.54.44.83410.254.49.87.57.6-4.119.38.68.53902.262.28.010.810.7-3.619.38.17.35991.095.62.76.04.01.55.93.33.53.75.96.3-1.38.23.43.80.10.90.40.30.70.3-0.11.4-2.4-2.50.1-1.6-0.40.0-0.91.42.4-0.22.60.80.7Unemployment rate (a)18.112.711.29.711.010.09.3:::::::::::::::::::::7.92.02.42.46.17.64.58.32.01.71.64.08.54.6:-1.33.11.02.7-2.7-0.2-14.6-11.9-12.2-11.1-11.1-12.9-13.0-7.1-4.8-7.0-4.1-4.4-6.5-6.4-3.00.6-0.2-8.0-4.1-3.1-1.8:::::::52.054.452.858.657.154.552.5Structural budget balance (d)General government gross debt (c) (a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.General government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer price indexTerms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.31.1:Main features of country forecast - SERBIA2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
     
 
 
 
      
 
 
32.  TURKEY 

The strong 2021 economic recovery decelerated in early 2022 and is expected to weaken further 
before rebounding somewhat in 2023. Private consumption is forecast to stagnate, while the high 
country risk premium and tighter global financing conditions are set to dampen investment. The 
negative  terms-of-trade  shock  from  the  higher  global  commodity  prices  is  set  to  materially 
worsen external imbalances. The overly loose monetary policy remains a major disruptive factor 
leading to very high and rising domestic inflation and elevated risks. Although the budget deficit is 
set to increase, the government debt-to-GDP ratio is forecast to remain broadly stable. 

Slowing down 

Base effects and robust domestic and external 
demand  propelled  economic  growth  to  double-
digits  in  2021.  Despite  growing  inflationary 
pressures  (March  inflation  was  61%  y-o-y), 
household  consumption  was  very  strong, 
supported  by  a  recovering  labour  market  and 
deeply negative real interest rates. Net exports 
had  a  sizeable  positive  contribution  to  growth 
as  the  strong  export  performance  continued 
unabated,  while  imports  were  suppressed  by 
the  depreciation  of 
Investments 
weakened in the second half of the year, while 
stocks  accumulated  in  the  COVID-19  crisis 
continued to unwind fast. 

lira. 

the 

The  economic  growth  momentum,  however, 
decelerated  in  early  2022  and  was  further 
weakened by the fallout of Russia’s invasion of 
Ukraine.  Heightened  volatility  and  uncertainty 
took a toll on economic sentiment, in particular 
in  services  and 
trade.  Consumer 
retail 
confidence fell steeply in April, from an already 
very  low  level.  High  input  costs  due  to  rising 
global  commodity  prices  and  supply  chain 
disruptions  undercut  manufacturing  strength. 
The  slowdown  of  industrial  activity  deepened, 
with  March  high-frequency  data  indicating  a 
contraction for the first time in about a year. 

inflation,  elevated  uncertainty  and 

High 
global challenges to supress growth 

Economic  growth  is  expected  to  fall  sharply  in 
2022, when it is set to be driven exclusively by 
net  exports,  before  rebounding  modestly  in 
2023  as  domestic  demand  picks  up.  A 
confluence of domestic and external challenges 
is  likely  to  materially  slow  down  economic 
activity.  Private  consumption  is  forecast  to 
largely stagnate, as pent-up demand dissipates 
and 
is 
undermined  by  the  very  high  inflation,  in 

households’ 

purchasing 

power 

128 

particular  due  to  the  strong  rise  in  food  and 
energy  prices.  Without  a  budget  revision, 
inflation  would  also  take  the  edge  off  public 
consumption.  The  high  country  risk  premium 
and  growing  uncertainty,  coupled  with  tighter 
global financing conditions, are expected to sap 
investment performance. 

The  disruption  of  global  supply  chains  and  the 
lower external demand because of Russia’s war 
against Ukraine is forecast to significantly curb 
export  growth.  However,  exports  are  likely  to 
continue expanding, supported by previous price 
competitiveness gains and the further lifting of 
pandemic-related  restrictions.  Service  exports 
may  even  benefit  from  the  conflict  in  certain 
sectors,  as  international  transport  corridors 
have  been  re-routed  through  Turkey  and  the 
country  remains  open  to  Russian  tourists. 
Turkey  may  also  benefit  from  a  possible 
relocation  of  some  companies  out  of  Russia 
and  from  the  shortening  of  global  supply 
chains.  Despite  a  continuation  of  a  relatively 
robust  net  exports  contribution  to  growth, 
external  imbalances  are  forecast  to  worsen 
significantly. The negative terms of trade shock 
from  the  higher  global  commodity  prices, 
energy  in  particular,  is  the  key  factor  driving 
this development. 

-8-6-4-2024681014151617181920212223Graph II.32.1: Turkey -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
Following a strong recovery in 2021, the labour 
market  is  forecast  to  stagnate,  with  limited 
gains in employment and a broadly unchanged 
unemployment rate. 

Real  interest  rates  have  been  deeply  negative 
since  late  2021, triggering  a  steep  drop  in  the 
lira  and  a  resulting  multiyear  record  spike  in 
inflation. In an environment of persistent global 
inflationary  pressures,  the  continuation  of  an 
excessively  loose  monetary  policy  stance  is 
expected  to  keep  domestic  inflation  very  high 
and  to  further  entrench  the  rising  inflationary 
expectations. 

Candidate Countries, Turkey 

Higher budget deficits but stable debt 

The  budget  execution  outperformed  the  2021 
target  and  the  good  performance  continued  in 
the  first  quarter  of  2022.  The  2022  budget, 
however,  is  outdated,  as  it  is  based  on  an 
unrealistic  macroeconomic  scenario  and  does 
not  include  a  number  of  measures  on  the 
revenue and expenditure side to lower inflation 
and  support  the  lira.  Therefore,  the  annual 
deficit is expected to increase above plans and 
its previous-year levels and to remain elevated 
next  year.  Despite  the  bigger  deficit  and 
significant  valuation  effects,  high  inflation  is 
forecast  to  keep  the  government  debt-to-GDP 
ratio  broadly  stable  through  the  denominator 
effect.  Fiscal  challenges  loom  large  in  view  of 
growing  contingent  liabilities  and  the  political 
cycle,  with  executive  and  parliamentary 
elections due in 2023. 

Risks are elevated 

Turkey’s  high  exposure  to  Russia  makes  it 
vulnerable  to  a  drawn-out  war  in  Ukraine.  The 
global  monetary  policy  tightening  cycle  is 
another challenge for the economy, which relies 
on  sizeable  short-term  external  financing.  The 
lack  of 
unorthodox  monetary  policy  and 
credibility remain key sources of domestic risk. 

129 

01020-6-4-2024681014151617181920212223% Unemployment rateEmployment growth (lhs)Real GDP growthforecast%Graph II.32.2: Turkey-Labour marketbn TRYCurr. prices% GDP02-172018201920202021202220237209.0100.05.83.00.91.811.02.03.03995.555.45.30.61.53.215.10.52.0942.413.15.26.54.12.22.10.01.02016.028.010.1-0.2-12.47.26.4-1.53.02551.735.45.98.84.6-14.824.97.07.32582.135.88.1-6.2-5.47.62.00.94.57074.498.15.91.71.52.710.11.73.06.61.2-2.24.110.6-0.12.1-0.3-2.3-0.24.9-6.30.00.0-0.34.13.1-7.16.52.21.0:1.9-2.3-4.57.71.62.6Unemployment rate (a)9.910.913.713.112.012.812.6:17.022.714.821.961.663.5:15.818.97.618.460.962.8:::::::10.816.513.914.828.762.858.811.216.315.212.319.463.154.1:::::::-7.0-5.5-3.0-6.3-3.0-4.9-4.0-4.8-2.70.7-4.9-2.2-3.8-3.5-0.3-2.3-3.9-4.7-2.7-4.5-4.5:::::::41.230.432.739.742.041.439.3Structural budget balance (d)General government gross debt (c) (a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.General government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer price indexTerms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.32.1:Main features of country forecast - TURKEY2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
    
 
 
 
                            
 
 
Other non-EU Countries 

 
 
 
33.  THE UNITED KINGDOM 

During 2021, the UK economy clawed itself back from the 2020 slump induced by the pandemic, 
coming close to pre-pandemic output levels by end year. Looking ahead, growth is expected to be 
sluggish  as  high  energy  prices  and  tighter  fiscal  and  monetary  policy  weigh  on  disposable 
incomes and private consumption. Inflation is set to remain high, as the economy grapples with a 
combination of supply side bottlenecks, high commodity prices and tight labour market.  

Recovery has come with rising prices 

UK  GDP  grew  by  7.4% 
in  2021,  after 
contracting by 9.7% in 2020. The recovery was 
driven 
largely  by  private  and  government 
consumption, with a negative contribution from 
net exports. Growth  was  0.9% in Q3 and 1.3% 
in  Q4,  giving  a  large  statistical  “carryover”  of 
nearly  2.7%  for  GDP  for  2022.  Inflation  rose 
sharply  from  mid-2021  and  continued  to 
increase in early 2022 to 7% in March, pushed 
up mainly by higher prices for energy, fuels and 
other tradeable goods. 

Low growth momentum in 2022 and 2023 

The UK saw a spike in COVID-19 cases in early 
2022  as  the  Omicron  variant  took  hold.  New 
cases  then  fell  back  quickly,  and  all  remaining 
restrictions  were  eliminated  in  late  February 
and March. The UK then saw a steep increase in 
deaths in April, much higher than either the US 
or EU. No further lockdowns are assumed over 
the forecast period, though the virus remains a 
risk  factor  for  the  outlook,  unless  deaths 
subside rapidly. Survey data (PMIs) for services 
showed a clear boost in February from the end 
of  COVID  restrictions,  and  manufacturing  PMIs 
have been buoyant. However, both weakened in 
invasion  of 
March  following 
Ukraine.  Consumer  confidence  has  declined 
steadily from the start of the year, and is now 

the  Russian 

132 

at  levels  last  seen  during  the  global  financial 
crisis  in  2008.  Monthly  GDP  figures  show  the 
UK economy grew by 0.8% m-on-m in January, 
but stalled in February, expanding by just 0.1%.  

private 

consumption 

GDP  is  expected  to  grow  only  slowly  during 
being 
2022,  with 
negatively  affected  by  higher 
inflation, 
weakening sentiment, and fiscal and  monetary 
tightening.  The  Chancellor’s  March  Spring 
Statement carried through with planned rises to 
National  Insurance  rates,  while  not  uprating 
welfare benefits to fully reflect higher inflation. 
Additional  reliefs  to  households  to  cope  with 
the higher cost of living were also limited. Gas 
supplies  a  higher  share  of  total  energy  in  the 
UK  than  in  most  EU  countries,  and  higher 
energy  prices  will  cut  deeply  into  household 
incomes  from  April,  and  again  in  October,  as 
the regulatory price caps on fuel bills increase. 
Higher  taxes  and  prices  will  both  reduce  real 
household  disposable  income  with  stronger 
effects  for  those  on  lower  incomes,  although 
consumption  will  be  supported  to  some  extent 
by a projected fall in the household saving rate 
back to close to pre-pandemic levels.  

investment 

While slowing  down substantially as compared 
to  2021,  government  consumption 
is  still 
projected  to  contribute  positively  to  growth  in 
is 
2022  and  2023.  Business 
forecast to see some pick-up in 2022, as firms 
make  use  of  the  temporary  “super-deduction” 
which  allows  an  offset  of  130%  of  eligible 
spending  and  which  is  due  to  end  by  April 
2023.  Nevertheless, 
this 
investment  response  is  highly  uncertain,  given 
the worsening outlook, rising interest rates, and 
imports  and 
supply  side  constraints.  Both 
exports are  projected  to  grow  only  slowly  over 
the  forecast  horizon,  with  net  exports  making 
small negative net contributions to growth. GDP 
is  expected  to  grow  by  3.4%  in  2022  and  by 
1.6% in 2022. 

the  strength  of 

-12-10-8-6-4-20246814151617181920212223Graph II.33.1: The United Kingdom -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
      
Other non-EU Countries, The United Kingdom 

The labour market has tightened 

A narrowing deficit, but a larger state 

The  labour  market  is  tight,  with  vacancies  at 
high  levels.  The  end  of  the  pandemic  furlough 
scheme  in  September  2021  did  not  noticeably 
increase  unemployment,  which  fell  to  3.8%  in 
February  2022,  the  same  as  pre-pandemic. 
Participation  rates  and  total  employment  are 
however around  1pp  lower than  pre-pandemic. 
The  unemployment  rate  is  projected  to  remain 
broadly  stable  over  the  forecast  horizon.  The 
Bank of England has raised  the base rate  four 
times  since  December  to  1%,  and  markets 
expect further rises of around 125 basis points 
in  2022,  given  the  low  level  of  labour  market 
slack,  and  inflation  well  above  the  2%  target 
level.  Nominal  wages  are  rising  at  around  5%, 
below 
inflation,  but  pay  settlements  and 
inflation expectations have been edging up 

Higher inflation is in store  

Consumer price inflation is forecast to increase 
further  and  peak  in  late  2022,  mainly  due  to 
the  increase  in  energy  prices  and  (regulated) 
price  caps.  Inflation  is  then  expected  to  fall 
back in 2023 as energy prices soften and price 
pressures 
tradeable  goods  ease  as 
bottlenecks loosen. Overall, prices are expected 
to  increase  by  7.0%  in  2022  and  by  3.6%  in 
2023. 

for 

The  UK  government  provided  substantial  fiscal 
support  during  the  pandemic,  with  the  public 
deficit expanding to 12.8% of GDP in 2020 and 
8.3% in 2021. The deficit should fall rapidly in 
2022  to  around  3.9%  of  GDP  and  2.3%  in 
2023,  as  higher  taxes  and  slower  public 
spending  growth  take  effect.  However,  both 
spending  and  tax  revenue  are  expected  to 
remain  at  high  levels  compared  to  the  last 
decade,  with  tax  receipts  at  close  to  40%  of 
GDP. 

Risks are tilted to the downside 

The  UK  has  been  hit  by  compounded  shocks, 
including  COVID-19,  Brexit,  and  the  impact  of 
the  Russian  invasion  of  Ukraine.  The  response 
of consumers to falling real incomes in a highly 
uncertain  environment  may  be  to  reduce 
consumption  more  than  expected,  while  the 
response  of  private  investment  to  existing  and 
possible  new  policy  measures  -  already  hinted 
at in the Chancellor’s Spring statement -  could 
the  upside  or  downside.  A 
surprise  on 
the  domestic  COVID-19 
in 
deterioration 
situation 
risk.  Finally,  supply 
remains  a 
constraints  could  prove  longer  lasting  than 
assumed, increasing inflationary pressures, and 
heightening risks of a wage-price spiral. 

133 

bn GBPCurr. prices% GDP02-172018201920202021202220232317.1100.01.71.71.7-9.37.43.41.61424.461.51.82.41.3-10.66.24.82.0511.322.11.80.44.2-5.914.33.61.4395.817.12.0-0.10.5-9.55.93.02.2625.427.02.92.83.4-13.0-1.35.31.2654.528.23.23.12.9-15.83.85.82.32305.199.51.61.52.5-10.18.53.51.61.91.61.7-9.68.04.31.90.0-0.4-0.1-0.60.8-0.40.0-0.2-0.10.11.0-1.4-0.2-0.40.91.21.1-0.5-0.80.91.0Unemployment rate (a)6.04.13.84.54.54.04.02.92.54.22.25.44.53.02.12.13.612.1-2.72.02.48.14.84.614.010.43.94.42.12.02.05.10.33.82.62.12.31.71.02.57.03.60.70.81.1-2.31.3-8.6-0.2-5.9-6.5-6.1-6.0-6.7-8.6-8.8-3.4-3.9-2.7-2.5-2.6-4.6-4.9-4.9-2.2-2.4-13.1-8.3-3.9-2.3:::::::62.784.583.8102.5102.8100.298.4Structural budget balance (d)General government gross debt (c) (a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP. (e)  CPIH is consumer price index which includes costs of owner-occupied housingGeneral government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer price index (CPIH) (e)Terms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.33.1:Main features of country forecast - UNITED KINGDOM2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
 
 
             
 
 
34.  THE UNITED STATES 

Following a rapid expansion in 2021, US output contracted in 2022-Q1. Growth is forecast to pick 
up  in  the  next  quarters,  but  at  a  lower  rate  than  observed  in  2021,  as  decades-high  inflation, 
fuelled by tight labour market and Russia’s war of aggression against war in Ukraine, weighs on 
household  incomes,  while  financial  conditions  tighten.  2023  is  set  to  see  further  moderation  in 
output growth, converging down to potential. Inflation is projected to peak in 2022-Q2 and then 
gradually come down as supply constraints progressively recede, energy price inflation eases and 
domestic  demand  moderates. Higher inflation for longer and the impact of  geopolitical tensions 
are the main risks to the outlook. 

and  fixed  investment  are  set  to  remain  the 
main  growth  engines,  but  their  pace  of 
expansion  is  expected  to  decelerate  over  the 
forecast  horizon  as  output  growth  gradually 
converges back to potential. 

After  2021  expansion,  GDP  contraction 
signals troubles ahead 

its  pre-pandemic 

The  US  real  GDP  increased  by  5.7%  in  2021, 
the fastest rate of expansion since early 1980s. 
Activity  saw  a  sharp  acceleration  in  2021-Q4 
(1.7%  q-o-q  increase)  as  suppliers  re-stocked 
inventories  depleted  during  the  post-COVID 
rebound. Output at the end of 2021 stood 3.1% 
above 
level  as  private 
consumption  increased  by  7.9%,  reaching  its 
pre-COVID trend. Activity was also supported by 
private  investment,  which  increased  by  7.8%, 
propelled  by  double-digit  growth  in  equipment 
and  intellectual  property  and  an  expansion  in 
residential construction. Net exports contributed 
negatively to growth, as a robust rise in exports 
(4.5%  in  2021)  was  outpaced  by  imports 
increasing  14%  over  the  year,  fuelled  by 
flourishing domestic demand. 

According  to  an  advance  estimate,  US  output 
fell by 0.4% (q-o-q SA) in 2022-Q1, as exports 
imports 
unexpectedly 
continued expanding). Private consumption and 
investment growth remained robust, pointing to 
continued strength of domestic demand. 

contracted 

(while 

Growth  expected  to  slow  in  2022,  remain 
positive 

GDP is expected to rise by 2.9% in 2022 and by 
2.3% in 2023, lower than projected in autumn. 
While  the  Russian  invasion  of  Ukraine  should 
affect  activity  only  indirectly  (mainly  via  the 
the  projected 
commodity  price  channel), 
elevated  consumer  inflation  is  expected  to 
weigh  on  household  real  incomes,  dragging 
down  private  consumption.  A  faster-than-
previously-envisaged  monetary  tightening,  in 
reaction to continued inflation pressures and a 
tight labour market, is expected to constitute a 
further  drag  on  growth.  Private  consumption 

134 

reflecting 

Due  to  US  dollar  appreciation,  imports  volume 
growth  is  projected  to  remain  high,  at  almost 
9%, in 2022, but is set to slow down to 3% in 
less  dynamic  domestic 
2023, 
demand and the further progress in restocking 
inventories.  Export  growth 
to 
accelerate  to  around  5.5%  in  both  2022  and 
2023,  with  export  volume  surpassing  the  pre-
pandemic 
in  mid-2023.  Net  exports’ 
contribution  to  growth  will  remain  negative  in 
2022  and  will  turn  marginally  positive  only  in 
2023.  The  current  account  deficit  widened  in 
2021,  and  may  further  increase  in  terms  of 
GDP in 2022, before improving in 2023.  

is  forecast 

level 

War in Ukraine adds to inflationary pressures 

Headline CPI inflation reached 4.7% in 2021 on 
the  back  of  strong  base  effects,  flourishing 
demand,  high  energy  prices  and  supply 
constraints.  Inflation  is  expected  to  further 
increase  in  the  first  half  of  2022,  fuelled  by 
even  higher  energy  and  commodity  prices  due 

-6-4-20246814151617181920212223Graph II.34.1: The United States -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
      
Other non-EU Countries, The United States 

to  the  war  in  Ukraine,  as  well  as  continued 
robust  domestic  demand  and  persisting  supply 
is  projected  to 
Inflation 
chain  disruptions. 
moderate  into  the  second  half  of  the  year  as 
monetary policy tightening succeeds in shifting 
expectations,  while  supply  chain  constraints 
and  commodity  prices  start  to  ease  gradually. 
However, inflation is not expected to reach the 
Federal  Reserve’s  (Fed’s)  target  of  2%  by  the 
end of the forecast horizon.  

The  pace  of 
is  expected  to 
jobs  growth 
decelerate  over  the  next  two  years,  but  wage 
pressures  may  persist 
in  some  market 
segments. The unemployment rate is set to fall 
to  close  to  3.5%  in  late  2022  and  remain  at 
around that level in 2023. 

Policy mix will turn firmly contractionary 

The  Fed  accomplished 
its  asset  purchase 
tapering  in  March  2022  and  lifted  its  target 
funds  rate  for  the  first  time  since  pre-
pandemic,  by  0.25  pps,  to  the  0.25%-0.5% 
range.  The  March  Federal  Open  Market 
Committee  meeting  minutes  suggest  that  the 
Fed is prepared to keep tightening aggressively 
during  2022  and  could  start  reducing  its 
balance  sheets  in  June.  Although  recent  high 
inflation prints have pushed nominal long yields 
above  their February  2020  levels,  real  interest 
rates remain unusually low. The yield curve (its 
10y-2y  segment)  briefly  inverted  in  early  April 

2022,  but  returned  to  positive  territory  more 
recently. 

On  the  fiscal  front,  the  general  government 
deficit is set to fall from around 12% of GDP in 
2021 to close to 6% of GDP in 2022 and to 5% 
of  GDP  in  2023.  With  no  extra  spending 
packages  currently  in  the  pipeline,  the  fiscal 
impulse  will  remain  negative  over the  forecast 
horizon. After a steep increase of about 14 pps 
in 2020, general government debt fell by 4 pps 
to 129% of GDP in 2021, and is set to continue 
decreasing  to  123.5%  of  GDP  and  122%  of 
GDP in 2022 and 2023, respectively. 

The risks are skewed to the downside  

A  higher  inflation  for  longer,  in  part  due  to 
intensified  wage-price  pressures, 
lingering 
supply  chain  disruptions  (e.g.  if  lockdowns  in 
China are extended) and an outsized impact of 
the  war  in  Ukraine  on  prices,  risks  eroding 
consumer  purchasing  power  and  depressing 
demand.  Persistent  inflation  resulting  in  a 
faster-than-projected  tightening  of  monetary 
policy could also considerably raise the cost of 
financing and further stifle demand, increasing 
the risk of recession in 2023. 

135 

bn USDCurr. prices% GDP02-1720182019202020212022202322997.5100.02.02.92.3-3.45.72.92.315746.968.52.22.92.2-3.87.93.42.23250.714.10.81.22.02.01.10.01.64941.721.51.94.43.1-1.66.13.42.52479.910.84.12.8-0.1-13.64.65.75.43395.814.83.54.11.2-8.914.08.72.723250.0101.12.02.82.1-3.65.73.02.42.03.02.4-2.66.82.92.30.00.20.0-0.60.00.4-0.1-0.1-0.3-0.2-0.3-1.4-0.70.20.61.71.2-5.83.23.31.1Unemployment rate (a)6.43.93.78.15.43.63.52.93.23.06.75.65.43.91.51.91.94.13.25.92.711.413.213.321.718.213.813.41.92.41.81.24.26.42.82.12.41.81.24.77.33.1-0.20.80.6-1.26.02.30.7-4.9-4.3-4.1-4.3-4.8-5.3-5.0-3.6-2.1-2.2-2.8-3.6-3.9-3.4-6.7-6.1-6.4-15.3-11.7-5.7-4.9:::::::83.9107.0108.6132.8128.8123.4122.1Structural budget balance (d)General government gross debt (c)(a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP. (*) Employment data from the BLS household survey. General government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer price indexTerms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.34.1:Main features of country forecast - UNITED STATES2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
 
 
        
 
 
35.  JAPAN 

After  subdued  growth  in  the  first  quarter  of  2022,  amid  the  Omicron  spread  and  continued 
containment measures, economic activity is expected to accelerate in the remainder of 2022 as 
the economy reopens. Real GDP growth is likely to moderate slightly in 2023 as cyclical rebound 
subsides and fiscal policy support is gradually scaled back.  

Recovery  subdued  amid  recurrent  COVID-19 
containment measures  

Growth  set  to  remain  robust  in  2022  as 
private demands rebounds 

containment  measures 

in 
Repeated  waves  of  COVID-19  resulted 
continued 
and 
dampened  private  consumption  growth  for 
most  of  2021,  while  supply  chain  disruptions 
affected  negatively  investments  and  exports. 
However,  the  negative  effects  on  growth  were 
tempered  by  sustained  fiscal  support  and 
recovering  global  demand.  Economic  activity 
picked up in the last quarter of 2021 amid high 
vaccination  rates  and  easing  supply  side 
constraints.  Overall, real GDP growth increased 
by 1.6% in 2021.  

improves 

On  the  domestic  side,  private  consumption 
recovery  is  expected  to  set  in  as  from  the 
second quarter of 2022, as services reopen, the 
and 
situation 
labour  market 
consumer spending out of accumulated savings 
increases.  However,  rising  commodity  prices 
and weakening currency might dent consumers’ 
purchasing  power.  Accommodative  funding 
conditions and rising  spending on digitalisation 
and  automation  are  likely  to  support  private 
investments,  but 
input  prices, 
declining  profit  margins  and  elevated  global 
uncertainty  might 
limit  the  scale  of  the 
recovery  in  2022.  At  the  same  time,  public 
spending 
to  support  growth 
reflecting  previously  announced  fiscal  stimulus 
measures. 

increasing 

forecast 

is 

to 

On  the  external  side,  ongoing  supply  side 
disruptions  and  weakening  global  demand  are 
limit  export  growth,  despite 
expected 
depreciating currency. Services trade is likely to 
be  supported  by  easing  of  travel  restrictions 
and  weaker  currency. 
is 
projected  to  moderate  amid  rising  global 
commodity  prices.  Overall,  net  exports  are  set 
to  contribute  slightly  positively  to  growth  in 
2022  with  real  GDP  projected  to  increase  by 
1.9%. 

Import  growth 

Output growth moderates in 2023 

The  pace  of  real  GDP  growth  is  expected  to 
moderate  slightly  to  1.8%  in  2023,  as  the 
cyclical  forces  that  supported  the  post-COVID-
19  recovery  dissipate.  Dwindling  fiscal  support 
and  fading  impact  of  services’  reopening  are 
likely to limit the pace of consumption  growth. 
However,  growing 
ICT  spending  and  easy 
funding  conditions  are  projected  to  support 
private  investment  growth.  Exports’  growth  is 
set to remain subdued while imports’ growth is 
forecast  to  pick  up  slightly  leading  to  neutral 
growth  contribution  of  external  demand.  The 

The  rebound  was  short-lived  as  mobility 
plunged again in the beginning of 2022 due to 
the  Omicron  variant.  Retail  sales  data  indicate 
that  private  consumption  growth  might  have 
turned  negative  in  the  first  quarter  of  2022, 
reflecting  extension  of  containment  measures. 
At 
industrial  production 
remained sluggish due to persistent supply side 
bottlenecks,  higher  commodity  prices,  and 
indicating  stagnant 
increasing  uncertainty, 
investment and export  growth outlook.  Overall, 
real GDP growth is expected to have flatlined in 
the first quarter of 2022. 

the  same 

time, 

136 

-6-5-4-3-2-1012314151617181920212223Graph II.35.1: Japan -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
                  
2023 growth rate remains well above potential 
growth,  as  the  post-COVID  gradual  catch-up 
continues.  Output  is  only  likely  to  reach  pre-
pandemic level at the end of 2023. 

Fiscal support is set to diminish 

Sizeable fiscal stimulus (14% of GDP in 2020-
2021),  which  sustained  consumption  and 
investments  during  the  crisis,  was  further 
extended  at  the  end  of  2021  with  yet  another 
fiscal  package  (4½%  of  GDP).  Going  forward, 
additional  support  measures  might  be  added 
during 2022, though their impact is expected to 
fade  out  towards  the  end  of  the  forecast 
is 
horizon.  Overall, 
projected  to  fall  from  around  7½%  of  GDP  in 
2021 to about 6½% of GDP in 2022 and 4% of 
GDP in 2023. Public debt is forecast to stabilise 
at  around  265%  of  GDP  in  both  2021  and 
2022  before  declining  to  around  261%  in 
2023. 

the  headline  deficit 

Monetary policy remains constrained 

The  Bank  of  Japan  provided  ample  liquidity  to 
stabilise 
to 
corporates and support the economy during the 
pandemic. However, weakening currency,  

the  markets,  sustain 

lending 

Other non-EU Countries, Japan 

negative  interest  rates  and  sizeable  direct 
involvement  of  the  Bank  of  Japan  in  the 
domestic  asset  markets  limits  the  scale  of 
future support. At the same time, after turning 
negative  in  2021,  annual  consumer  inflation 
rate is expected to rise to around 1½% in both 
2022  and  2023,  on  the  back  of  rising 
commodity  prices,  depreciating  currency  and 
the  fading  impact  of  one-off  price  reductions 
and  subsidies.  Still,  inflation  is  set  to  remain 
below  the  Bank  of  Japan  target  of  2%  for  the 
foreseeable future, reflecting declining working 
age population and sluggish wage growth amid 
low labour mobility and backward-looking wage 
bargaining process. 

Risks are broadly balanced 

Downside  risks  include  more  persistent  supply 
side  disruptions,  slower  global  demand  and 
higher input  prices crippling  the  manufacturing 
sector. Weaker currency might further increase 
inflationary  pressures,  dampening  private 
supporting 
demand  while 
exports. On the upside, additional fiscal support 
to consumers might result in a further boost to 
private consumption. 

simultaneously 

137 

bn JPYCurr. prices% GDP02-17201820192020202120222023541981.6100.00.80.6-0.2-4.51.71.91.8291926.353.90.60.2-0.5-5.31.32.31.6116136.921.41.31.01.92.32.11.71.4137335.525.3-0.20.41.0-4.6-1.50.32.199824.118.44.73.8-1.5-11.811.73.63.4102758.719.02.83.81.0-7.25.22.32.7565693.2104.40.90.7-0.2-4.82.41.81.80.50.40.3-3.60.81.71.70.00.2-0.1-0.1-0.10.00.00.30.0-0.4-0.81.00.20.10.11.80.9-0.50.00.30.3Unemployment rate (a)4.22.42.42.82.82.72.6-0.41.40.8-0.80.20.90.9-1.12.62.03.4-1.4-0.7-0.610.49.410.718.617.513.710.9-0.60.00.60.9-1.00.51.50.11.00.50.0-0.21.61.5-2.1-5.00.96.7-9.0-6.30.01.00.20.00.60.3-0.5-0.42.93.53.43.03.42.52.6-5.9-2.5-3.0-9.0-7.6-6.5-4.1:::::::::199.4232.5236.1259.0264.9265.2260.9Structural budget balance (d)General government gross debt (c) (a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.General government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer  price indexTerms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.35.1:Main features of country forecast - JAPAN2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
 
 
                          
 
 
36.  CHINA 

China’s  growth  outlook  remains  burdened  by  widespread  local  lockdowns  that  disrupt  economic 
activity,  high  corporate  indebtedness,  especially  in  the  real  estate  sector,  and  a  worsening 
external  environment.  Turmoil  in  the  real  estate  sector  is  likely  to  weigh  on  growth  over  the 
forecast  horizon  due  to  ongoing  deleveraging  and  poor  demand.  In  the  run-up  to  the  important 
20th  National  Congress  of  the  Chinese  Communist  Party  in  autumn  2022,  authorities  are 
expected to prioritise stability, by deploying a sizeable fiscal and monetary stimulus. However, a 
commitment to a disruptive zero COVID-19 policy could undermine efforts to boost growth.      

external demand, growth is forecast to weaken 
to  4.6%.  In  2023,  growth  is  projected  to 
strengthen  somewhat  to  5%,  but  declining 
productivity  growth,  an  excessively  leveraged 
corporate  sector  and  geopolitical  tensions  will 
weigh on economic performance.  

Household consumption recovery is expected to 
remain  sluggish,  amid  increasing  uncertainty 
due  to  more  frequent  lockdowns  in  larger  and 
more prosperous cities. Household incomes are 
set  to  be  significantly  affected  by  disruptions 
caused  by 
lockdowns,  especially  among 
migrant  workers  largely  employed  in  service 
sector  jobs  with  low  labour  market  protection. 
Furthermore,  weak  retail  sales  and  domestic 
tourism  numbers  in  the  first  quarter  confirm 
households  are  again  responding  to  greater 
precautionary 
uncertainty 
by 
savings.  Direct 
to 
support 
household  consumption  should  remain  limited 
given  the  authorities’  preference  to  boost 
economy through supply side measures.  

increasing 
government 

Sluggish growth continues in the first quarter 
of 2022 

Investment 

consumption. 

The  Chinese  economy  rebounded  sharply  in 
2021, growing by 8.1%, after a historical low of 
2.3%  in  2020.  Growth  was  primarily  driven  by 
the recovery in domestic demand, most notably 
was 
private 
somewhat  subdued  in  2021,  especially  in  the 
second  half  of  the  year,  reflecting  weakening 
prospects  in  the  real  estate  sector.  Strong 
external  demand  further  supported  growth, 
amid  robust  global  demand  for  consumer 
goods.  Still,  growth  slowed  markedly  towards 
the end of the year due to the ongoing turmoil 
in the broader construction sector and to more 
widespread and frequent lockdowns in line with 
China’s  strict  adherence  to  its  zero  COVID-19 
policy.  

to  4.8%  despite 

After  falling  to  4%  y-o-y  in  2021-Q4,  output 
growth  surprisingly  picked  up  in  the  first 
quarter  of  2022 
the 
introduction  of  strong  lockdown  measures  in 
several  large  cities  throughout  March,  most 
notably  Shanghai  and  Shenzhen.  Growth  was 
driven  by  still  recovering  private  consumption, 
but  also  by  a  stronger  contribution  from 
investment. Numerous real estate building sites 
were  temporarily  closed  in  the  last  quarter  of 
2021 as struggling developers cut expenditure. 
Following  government 
intervention,  viable 
projects  were  transferred  to  more  solvent 
companies, 
and 
construction  activities  gradually  resumed  in 
2022-Q1. 

owned, 

largely 

state 

Uncertain recovery despite policy support 

Growth  is  expected  to  remain  below  its  pre- 
pandemic  trend  in  both  2022  and  2023.  In 
2022,  despite the announced strong fiscal and 
monetary  impulse  to  offset  the  impact  of 
China’s  COVID-related  measures  and  weaker 

As  real  estate  investments  account  for  around 
50% of all fixed asset investments, the ongoing 
restructuring 
is 
expected  to  weigh  on  investment  growth  in 
both 2022 and 2023. Two consecutive years of 
declining  new  construction  and  more  frequent 

in  the  real  estate  sector 

138 

-2024681014151617181920212223Graph II.36.1: China -Real GDP growth and contributionsNet exportsInvestmentConsumptionDomestic demandReal GDP (y-o-y%)forecastpps.  
     
increased 

project  cancellations  significantly  depleted  the 
stock  of  projects  in  development.  Furthermore, 
in the context of weak demand and constrained 
financing,  developers  reliant  on  high  leverage 
and  quick  turnover  will  likely  postpone  new 
projects. On the other hand, the expected fiscal 
stimulus  in  2022  will  largely  be  delivered 
through 
infrastructure  spending. 
Although  previous  fiscal  stimuli  resulted  in  a 
sharp  increase  in  local  government  debt  and 
decreasing  returns  on  investment,  it  should  at 
least 
expected 
offset 
underperformance  in  the  real  estate  sector. 
Furthermore,  an  expansionary  monetary  policy 
and  stable  credit  growth  in  2022  should 
provide  a  more  favourable  environment  for 
corporate investment.  

partially 

the 

Growth  of  imports  is expected  to  outpace  that 
of  exports  in  2022  and  2023.  Geopolitical 
tensions,  rising  producer  prices  and  shifting 
consumer  preferences  in  advanced  economies 
in  favour of  services  will  all  weigh  on  external 
demand  for  Chinese  products.  At  the  same 
time,  rising  global  commodity  prices  will 
underpin  nominal  import  growth.  The  current 
account  surplus 
is  therefore  expected  to 
significantly narrow over the forecast period. 

Economic  stability  will  be  the  primary  policy 
priority 

As President Xi is looking to be confirmed to his 

Other non-EU Countries, China 

higher 

unprecedented third term at the Party Congress 
in  autumn,  maintaining  economic  stability  will 
be  a  priority  for  the  authorities  in  2022.  The 
growth target for the year was set ambitiously 
at  “around  5.5%”  of  GDP.  A  fiscal  impulse, 
estimated  at  between  2-3%  of  GDP,  is  being 
to  boost  domestic  demand 
implemented 
through 
in 
investment,  mostly 
infrastructure,  by  local  governments  and  state 
owned  enterprises.  Furthermore,  the  expected 
expansionary  monetary  policy  is set  to  provide 
liquidity  to  the  financial  sector  throughout  the 
year,  while  looser  credit  standards  should 
incentivise  credit  demand.  Already  in  April,  the 
banks’  reserve  requirement  ratio  was  lowered 
by  25 basis  points, freeing  up RMB  500  billion 
(around 0.45% of GDP) for new lending.  

A number of risks cloud the outlook. Significant 
deviations  from  the  zero  COVID-19  policy  are 
unlikely at least until the Party Congress, as the 
authorities  seek  to  maintain  credibility.  This 
policy  is  already  undermining  their  efforts  to 
boost  economic  growth  and  will  remain  the 
main downside risk to the economic outlook. At 
the  end  of  April,  cities  accounting  for  around 
42%  of  China’s  GDP  were  at  least  in  a  partial 
lockdown.  Other  short-term  risk  stem  from 
increased  geopolitical  uncertainties,  supply 
chain  disruptions  and  high  food,  energy  and 
commodity prices. 

139 

Table II.36.1:bn CNYCurr. prices% GDP02-17201820192020202120222023GDP101356.7100.09.46.76.02.28.14.65.0Private consumption38718.638.2-------Public consumption17362.517.1-------Gross fixed capital formation43062.542.5-------Exports (goods and services)18880.518.613.84.00.42.118.22.13.1Imports (goods and services)16227.516.012.87.3-3.7-1.011.03.65.8GNI (GDP deflator)---------Contribution to GDP growth:---------------------Employment-------Unemployment rate (a)4.13.83.64.24.0----------------Saving rate of households-------3.73.51.30.54.42.82.6Consumer price index (c)2.42.12.92.50.9---------Trade balance (goods) (b)4.42.72.83.53.22.62.54.00.20.71.91.91.61.5---------------------Current-account balance (b)Main features of country forecast - CHINA2020Annual percentage changeInventoriesNet exportsCompensation of employees/headUnit labour costs whole economyDomestic demandGDP deflatorTerms of trade goods (b)Structural budget balance(a) urban unemployment, as % of labour force.  (b) as a percentage of GDP. (c) national indicator.General government gross debt (b)General government balance (b)  
 
 
   
 
 
37.  EFTA 

As the COVID-19 related rebound loses momentum, Russia’s war of aggression against Ukraine is 
posing new challenges for the EFTA countries. The economic outlook is for more moderate growth, 
reflecting  weaker  external  demand  and  lower  disposable  income  growth  due  to  higher  energy 
prices.  The  consolidation  of  public  finances  is  also  likely  to  be  less  pronounced,  resulting  from 
lower than initially expected  revenue growth and additional measures  to  mitigate the  economic 
and social impact of high energy prices. The risks to the forecast are largely on the downside.  

Switzerland 

rising 

continued 

The  rebound  from  the  COVID-19  pandemic 
moderated  in  the  fourth  quarter  of  2021, 
pandemic-related 
reflecting 
containment  measures,  weakening  external 
demand  and 
inflationary  pressures. 
Nevertheless,  output  increased  by  about  3.7% 
in  2021,  compared  to  a  drop  in  economic 
activity  by  2.4%  in  2020.  In  particular,  exports 
performed better than expected. On the labour 
market,  short-time  working  schemes  helped  to 
on 
contain 
employment.  The  government  adopted  fiscal 
support  measures  amounting  in  total  to  about 
5¼% of GDP for the period 2020-21.  

impact 

overall 

crisis’ 

the 

The  outlook  is  based  on  a  less  supportive 
international  environment,  in  particular  due  to 
higher  energy  costs  and  weaker  international 
environment. The main growth driver during the 
forecast  period  is  expected  to  be  domestic 
demand.  Pent-up  demand  will  help  to  keep 
consumption  growth  at  high  levels  in  2022, 
while 
to 
recover,  despite  uncertainties  related  to  the 
war. In 2022 and 2023 export growth is set to 
return  to  average  levels,  as  the  2021  boom 
following the COVID-19 trade shock is likely to 
petter-out. Import growth is expected to remain 

investment  growth 

is  projected 

140 

contained,  leading  to  a  small  positive  growth 
contribution of net exports.  

The  usual  strengthening  of  the  Swiss  currency 
at  times  of  high  uncertainty  will  help  to 
partially  contain  the  impact  of  higher  energy 
prices  on  domestic  inflation.  Still,  consumer 
price  inflation  is forecast  to  increase  markedly 
above  2%  in  2022  due  to  the  external  energy 
price  shock,  but  to  moderate  again  in  2023, 
taking  into  account  base  effects.  After  several 
years of low employment growth, the situation 
on  the  labour  market  is  likely  to  rebound  in 
2022  and  2023,  which 
bring 
unemployment  rates  back  to  pre-COVID-19 
levels.  

should 

As the fiscal costs of fighting the pandemic are 
likely  to  decline,  Switzerland’s  public  finances 
are  expected  to  gradually  return  to  a  largely 
balanced fiscal position in 2022, while in 2023 
a  minor  surplus  is  forecast,  reflecting  the 
expected  pettering-out  of  negative  effects 
related  to  the  pandemic.  Thanks  to  largely 
balanced  public  accounts  in  2022  and  even  a 
slight surplus in 2023 as well as solid economic 
growth,  gross  debt  ratios  are  set  to  return  to 
pre-pandemic levels by 2023. 

Country-specific risks to the outlook are largely 
on  the  downside.  In  particular,  there  is  a  risk 
related to the Swiss franc’s  safe-haven  status, 
which  could  lead  to  a  rapid  appreciation, 
eroding the country’s price competitiveness.  

Norway 

Despite  the  slowdown  of  economic  activity  at 
the  end  of  2021  due  to  the  reintroduction  of 
containment  measures,  real  GDP  expanded  by 
3.9% after a mild contraction of 0.7% in 2020. 
The recovery was largely driven by base effects 
as  well  as  a  strong  rebound 
in  private 
consumption  reflecting  significantly  improved 
labour  market  conditions  and  the  return  of 

-6-4-20246814151617181920212223Graph II.37.1: Switzerland -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
        
Other non-EU Countries, EFTA 

to  positive 

consumer  sentiment 
territory. 
Investment  fell,  albeit  at  a  much  slower  pace 
than in the year before. The external sector had 
a positive contribution to growth also benefiting 
from higher oil and gas prices.  

Norges  Bank’s  Executive  Board  decided  on  23 
March  to  raise  the  key  policy  rate  by  another 
25  basis  points  to  0.75%  after  lifting  it  from 
the historic low of 0.0% to 0.25% and 0.5% in 
September and December 2021, respectively. 

the  government 
In  mid-February  2022, 
removed  all  containment  measures  that  it  had 
re-imposed  in  December  to  counteract  the 
Omicron  variant  and  since  then  economic 
activity  has  been  increasing  rapidly.  Growth  is 
expected to be robust in 2022 although easing 
somewhat  from  2021  due  to  the  impact  of 
Russia’s  war  of  aggression  against  Ukraine. 
Increased  consumer  confidence  combined  with 
a tight labour market is set to underpin private 
consumption  while  investment  should  recover 
mainly due to a pick-up in business investment. 
House  prices  rose  significantly  by  10.5%  in 
2021  and  continued  to  increase  in  the  first 
months  of  2022.  After  recovering  by  2.6%  in 
2021,  housing  investment  is  expected  to  grow 
modestly in 2022 due to concurrent headwinds 
the  uncertainty  about  economic 
including 
developments  going 
forward  and  higher 
interest  rates.  Net  exports  are  expected  to 
subtract  from  growth,  as  imports  are  set  to 
increase  at  a  faster  pace  than  exports,  largely 
driven by pent-up domestic demand.  

Expansion  is  projected  to  continue  in  2023, 
albeit  at  a  slower  pace  mainly  driven  by 
buoyant household spending and investment as 
well as a positive contribution of net exports to 
growth.  

Average  annual  CPI 
inflation  significantly 
accelerated to 3.5% in 2021 (up from 1.3% in 
2020)  mainly  driven  by  high  electricity  prices. 
In  the  first  three  months  of  2022,  consumer 
price  inflation  averaged  3.8%  y-o-y,  thus  well 
above  the  central  bank’s  target  of  2%.  The 

In  terms  of  public  finances,  spending  financed 
by  petroleum  revenue  in  2022  is  likely  to  be 
higher  than  projected  in  the  national  budget. 
The  government  has  submitted  proposals  to 
increase  expenditure  related  to  measures  to 
strengthen  national  defence  capabilities,  to 
help  the  intake  of  people  fleeing  from  Ukraine 
and 
for  households’ 
electricity bills. The fiscal  policy anticipates for 
2022  a  structural  non-oil  deficit  of  10.4%  of 
mainland  GDP  and  spending  of  oil  revenues 
equivalent  to  2.9%  of  the  sovereign  wealth 
fund’s assets.  

to  prolong  support 

Domestic  risks  to  the  outlook  are  clearly  tilted 
to  the  downside.  Uncertainties  in  the  property 
market  and  high  household  debt  levels  raise 
financial  stability  concerns,  which  are  however 
alleviated by the significant capital and liquidity 
the  Norwegian  banks. 
buffers  held  by 
Regarding 
the 
volatility  of  energy  prices  presents  upside  and 
downside  risks,  while  a  deterioration  in  growth 
prospects  of  Norway’s  major  export  markets 
points to downside risks. 

the  external  environment, 

Iceland 

In  2021  Iceland’s  economy  grew  by  4.3%  on 
the  back  of  domestic  consumption  and 
investment.  The  recovery  of  exports  was 
supported  by  an  increasing  number  of  tourist 
arrivals and  a  successful  fishing  season,  but  a 
strong  rebound  of  imports,  partially  due  to 
increasing  investment,  resulted  in  a  negative 
contribution of foreign trade to output growth. 

The  outlook  is  for  a  mild  recovery  to  continue 
at  a  slightly  lower  rate  in  2022-23.  Foreign 
trade is set to  be the  main  driver of growth in 
2022,  as  the  exposure  of  Iceland’s  exports  to 
Russia  is  limited,  while  monthly  readings  and 
short-term  indicators  show  increasing  exports 
of aluminium, fisheries and tourism. Growth of 
domestic  demand  is  set  to  decelerate  as 
compared  to  2021,  due  to  higher  commodity 
prices  and  higher  global  inflation,  which  will 
push up the domestic prices. 

141 

-6-4-2024614151617181920212223Graph II.37.2: Norway -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
        
European Economic Forecast, Spring 2022 

In  line  with  the  rebound,  the  unemployment 
rate is forecast to decline in 2022,  but further 
developments  are  uncertain,  as  pandemic-
related  hiring  subsidies  and  collective  pay 
agreements will expire in the autumn of 2022. 
In  early  2022,  the  unemployment  and  labour 
force  participation  rates  stood  at  their  pre-
pandemic levels of 4.5% and 82%, respectively.  

price  increases  in  the  housing  market  and 
strong  domestic  demand.  In  April  2022,  the 
Bank  of  Iceland  raised  the  key  interest  rate  to 
2.75%.  While  surrounded  by  uncertainty, 
inflation is set to increase in 2022 due to rising 
global inflation and Russia’s war of aggression 
against Ukraine, and to moderate in 2023.  

included  automatic  stabilisers, 

Due  to  pandemic-related  fiscal  measures, 
which 
tax 
reductions,  part-time  unemployment  benefits, 
firm-closure subsidies,  government guaranteed 
loans  to  companies  and 
increased  public 
investment,  the  general  government  deficit 
widened  to  8.2%  of  GDP  in  2021.  The  budget 
deficit  is  set  to  narrow  gradually  to  2.8%  in 
2023  in  line  with  the  expiry  of  pandemic-
related  measures  and 
revenue 
growth as the recovery continues.  

improving 

The  balance  of  risks  is  tilted  to  the  downside. 
Key  risks  stem  from  the  uncertain  global 
economic  outlook,  in  particular  global  inflation 
and  commodity  prices.  High  import  prices,  in 
particular  oil,  are  likely  to  weigh  on  real  gross 
disposable  income  and  consumption.  Domestic 
risks  relate  to  mismatches  in  the  housing 
market and continuously rising housing prices. 

to  6.7% 

in  2021  and 
Inflation  averaged  4.4% 
accelerated 
in  March, 
significantly exceeding the central bank’s target 
of  2.5%.  The  main  drivers  came  from  import 
prices, in particular fuel, together with ongoing  

y-o-y 

142 

-8-6-4-2024681014151617181920212223Graph II.37.3: Iceland -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps. Table II.37.1:202020212022202320202021202220232020202120222023-7.14.33.43.3-0.73.93.42.6-2.43.72.22.0-2.97.63.23.1-6.65.05.53.8-3.72.63.01.74.21.81.31.11.83.91.51.03.52.7-0.5-0.3Gross fixed capital formation-9.513.64.45.3-5.6-0.31.92.1-1.83.02.03.0Exports (good and services)-30.212.314.37.9-1.24.85.03.5-6.012.54.84.7-21.620.312.67.5-11.92.08.54.1-4.55.35.65.1GNI (GDP deflator)-6.74.43.43.30.24.53.32.6-2.44.42.22.0Contribution to GDP growth:Domestic demand-2.57.33.13.2-4.03.12.92.1-2.02.42.01.6Inventories0.2-0.10.00.0-0.4-0.10.90.11.1-3.70.00.0Net exports-4.8-2.90.40.13.70.9-0.40.3-1.55.00.30.4Employment-4.72.11.61.5-1.61.32.11.0--0.50.21.21.0Unemployment rate (a)5.56.05.55.34.44.43.63.54.85.64.64.23.07.37.45.61.64.53.03.0-0.83.71.01.25.65.05.53.70.81.81.71.41.20.20.00.27.94.04.44.520.119.120.019.7::::GDP deflator3.65.85.43.7-3.616.95.93.3-0.51.42.51.22.84.45.63.81.33.53.22.0-0.70.62.31.2-1.36.2-0.1-0.1-21.759.810.52.6-2.92.6-0.3-0.1-3.1-5.1-5.7-6.4-0.911.714.215.08.113.613.713.8Current account balance ©1.7-0.5-0.10.01.115.317.418.22.29.09.09.1-8.7-8.9-4.4-2.8-2.69.16.96.5-2.8-0.70.00.558.853.253.351.645.943.239.136.627.927.226.124.7General government balance (c)General government gross debt (c )(a) as % of total labour force. (b) gross saving divided by adjustd gross disposable income. (c)as a % of GDP.Compensation of employee/headUnit labour cost whole economySaving rate of households (b)National index of consumer pricesTerms of trade goodsTrade balance (goods) (c)Imports (goods and services)Main features of country forecast - EFTAIcelandNorwaySwitzerland(Annual percentage change)GDPPrivate ConsumptionPublic Consumption 
     
 
 
     
 
 
 
 
  
 
 
38.  RUSSIAN FEDERATION 

An  abrupt  fall  in  real  GDP  following  military  aggression  against  Ukraine  and  Western  sanctions 
are set to set back output levels by at least a decade, as Russia is forced to change its economic 
model  and  move  closer  to  autarchy.  In  addition,  living  standards  are  expected  to  collapse, 
accentuating  their  long-term  decline.  High  commodity  prices  could  somewhat  cushion  the 
economic decline and allow for some limited fiscal stimulus.  

War puts an end to strong recovery 

a 

of 

fuelled 

rebound 

terms  of 

Improving 
trade,  fiscal  support 
packages,  limited  lockdowns  and  higher  real 
wages 
private 
consumption in 2021. This, together with strong 
investment,  supported  the  recovery  of  the 
Russian  economy,  with  real  GDP  growing  by 
4.7% in 2021. The invasion of Ukraine and the 
implemented  by  the 
subsequent  sanctions 
international  community  halted  these  trends 
abruptly,  as  Russia  was  cut  off  from  most 
Western  production  inputs.  At  the  same  time, 
inflation, already running high  despite an early 
tightening of the Central Bank of Russia (CBR), 
shot up as the ruble plunged, the availability of 
inside 
imports  deteriorated,  supply  chains 
for 
Russia  were  disrupted  and  demand 
imported products temporarily surged.  

Commodity  exports  save  Russia 
economic disaster but the outlook is dire 

from 

High inflation expectations, rising job insecurity, 
a  loss  of  purchasing  power  and  scarcity  of 
imported  goods are  projected  to  cause  a  large 
fall  in  private  consumption  this  year.  Although 
government  consumption  is  set  to  increase 
moderately and partially stabilize the economy, 
the fiscal  stimulus is expected to  be limited to 
preserve  scarce  resources.  At  this  point,  it  is 
particularly difficult to predict the development 
in 2022 of export-related revenues, which are a 
crucial revenue source for the budget. 

companies. 

Private  investment  is  forecast  to  dramatically 
fall  by  more  than  20% 
in  2022,  given 
extremely  low  appetite  for  new  investment  in 
the  current  environment  amid  withdrawal  of 
foreign 
Isolated  pockets  of 
investment to  cater for import substitution are 
likely  to  emerge  in  some  sectors  but  investor 
confidence  is  projected  to  remain  depressed 
over  the  forecast  horizon  and  a  modest 
increase in public investment is not expected to 
compensate for the fall in private investment.  

to 

Imports  are  set  to  decline  steeply  reflecting 
the 
plummeting  private  demand  due 
deteriorating  economic  situation  and  limited 
access to imported goods due to sanctions and 
payment  restrictions.  Existing  sanctions  and 
self-sanctioning  of  the  private  sector,  which 
hamper  market  access  for  Russian  goods,  are 
expected  to  reduce  exports,  although  at  a 
slower  rate  than  imports  leading  to  a  modest 
positive contribution of net exports to growth in 
2022.  Assuming  no  escalation  of  sanctions 
in  place  on  29  April  and 
beyond  those 
continued 
exports, 
energy 
commodity exports will be the main anchor for 
the economy in these circumstances. Thanks to 
high 
for 
commodities,  export  revenues  are  projected  to 
increasing  the  current  account 
be  strong, 
surplus to 14% of GDP in 2022. This will enable 
the government to support the ruble, vulnerable 
groups and the economy, limiting the decline in 
real GDP to 10.4% in 2022.  

exclusion 

demand 

strong 

prices 

and 

of 

For  2023,  the  economy  is  forecast  to  stabilise 
as it adjusts to the new normal of severed ties 
to  the  West.  However,  real  GDP  growth  is 
expected to remain subdued, reaching 1.5%, as 
ongoing import substitution due to departure of 
foreign  companies  will  cause  inefficiencies. 
Uncertainty  regarding  the  nature  of  future 
economic  ties  with  the  rest  of  the  world  will 
continue  to  hamper  investor  confidence  and 

143 

-12-10-8-6-4-20246814151617181920212223Graph II.38.1: Russia -Real GDP growth and contributionsNet exportsInvestmentPriv. consumptionGov. consumptionInventoriesReal GDP (y-o-y%)forecastpps.  
  
European Economic Forecast, Spring 2022 

seriously  limit  the  growth  potential  of  the 
economy. 

Monetary policy fights for financial stability 

Already before the invasion of Ukraine, the CBR 
increased interest rates by 525 basis points to 
9.5%  in  less  than  a  year.  However,  in  early 
2022  inflation  was  still  running  high  due  to 
rising  food  prices  and  the  import  substitution 
policy.  After  the  invasion  of  Ukraine,  the  CBR 
reacted  quickly  and  more  than  doubled  its 
policy  rate  to  20%.  Together  with  stringent 
capital  flow  restrictions  and  state  guarantees 
for deposits, this was sufficient to stabilise the 
financial  system,  but  increased  headwinds  for 
the  economy.  Therefore,  following  appreciation 
of the ruble to pre-invasion levels, the CBR cut 
rates  in  two  steps  to  14%  in  April.  However, 
inflation  in  the  first  100  days of  the  year  was 
sufficient to put inflation at 10% in 2022 even 
in  absence  of  further  price  increases.  Inflation 
is  projected  to  exceed  20%  in  2022  due  to 
supply side bottlenecks and rising import prices. 
In  2023,  inflation  is  set  subside  to  10%  as 
purchasing  power  declines  and  consumption 
patterns change.  

Fiscal policy, the card blanche in 2022 

revenues, led to a small budget surplus of ¾% 
of  GDP.  The  reaction  of  the  fiscal  policy  to 
current  circumstances  is  highly  uncertain.  Still, 
it  is  forecast  that  fiscal  revenues  will  be 
supported by energy exports while expenditures 
will 
increase  to  support  the  economy.  A 
projected  small  deficit  of  ½%  of  GDP  in  2022 
is  set  to  widen  to  1½%  of  GDP  in  2023  as 
easing  commodity  prices  and  limited  Russian 
ability  to  export  them  curtails  revenues.  The 
to 
public  debt-to-GDP 
increase  moderately  due  to  declining  GDP. 
However, at less than 16% of GDP, it is set to 
remain  much 
to  other 
emerging market and advanced economies. 

lower  compared 

is  projected 

ratio 

Risks to the forecast are exceptionally large 

stronger-than-expected 

Uncertainties are atypically large in the current 
circumstances.  Downside  risks  are  dominated 
by  trade  compression,  an  accelerating  brain 
drain, 
production 
disruptions,  higher  military  costs  and  lower 
include 
business  confidence.  Upside 
higher-than-  expected  volumes  of  exports  and 
commodity  prices,  which  would  further  boost 
fiscal  revenues  and  support  the  economic 
rebound. 

risks 

In  2021,  a 
continued 
conservative  fiscal  policies  and  rising  energy 
fiscal 
prices,  which 

combination  of 

into  high 

translated 

144 

bn RUBCurr. prices% GDP02-17201820192020202120222023130312.8100.03.42.82.0-3.04.7-10.41.563329.648.65.44.23.1-7.39.5-13.82.023871.318.31.01.32.41.91.22.21.026893.720.65.20.41.6-4.47.0-22.00.040204.030.94.75.60.7-4.13.2-16.13.927930.421.47.52.73.4-12.116.7-25.85.4127237.597.63.33.01.3-2.24.7-9.71.64.12.52.3-4.36.5-10.81.1-0.2-0.50.4-0.20.8-0.10.0-0.40.9-0.51.4-2.60.60.40.70.3-0.8-1.91.3-2.20.3Unemployment rate (a)6.64.84.65.84.85.95.6:::::::::::::::::::::11.410.03.10.916.426.17.19.92.94.53.46.720.510.01.317.5-5.7-22.731.818.9-13.410.311.89.86.110.015.912.65.47.03.92.26.713.710.11.53.53.7-3.80.8-0.6-1.5:::::::15.013.613.818.413.514.615.6Structural budget balance (d)General government gross debt (c) (a) as % of total labour force. (b) gross saving divided by adjusted gross disposable income.  (c) as a % of GDP. (d) as a % of potential GDP.General government balance (c)EmploymentCompensation of employees / headUnit labour costs whole economySaving rate of households (b)GDP deflatorTrade balance (goods) (c)Current-account balance (c)Consumer  price indexTerms of trade goodsContribution to GDP growth:Domestic demandInventoriesNet exportsGNI (GDP deflator)Table II.38.1:Main features of country forecast - RUSSIA2021Annual percentage changeGDPPrivate ConsumptionPublic ConsumptionGross fixed capital formationExports (goods and services)Imports (goods and services) 
 
 
        
 
 
ACKNOWLEDGEMENTS 

This report was prepared in the Directorate-General for Economic and Financial Affairs under the 
direction of Maarten Verwey – Director-General and Reinhard Felke – Director “Policy coordination, 
economic  forecasts  and  communication”.  It  has  benefitted  from  the  close  collaboration  with 
Directorate-General for Financial Stability, Financial Services and Capital Markets Union. 

Executive  responsibilities  were  attached  to  Laura  Bardone  –  Head  of  Unit  “Economic  situation, 
forecasts,  business  and  consumer  surveys”,  Kristian  Orsini  –  Deputy  Head  of  Unit  “Economic 
situation, forecasts, business and consumer surveys”, and the forecast coordinators – Reuben Borg 
and Alexandru Zeana.  

The Executive Summary  was prepared  by Kristian Orsini.  In the  section on “Economic  outlook for 
the  euro  area  and  the  EU”,  Chapter  1  was  prepared  by  Laura  Bardone  and  Oliver  Dieckmann. 
Chapter  2  “Economic  outlook”  was  prepared  under  the  responsibility  of  Laura  Bardone  and 
coordinated by Kristian Orsini. This chapter benefited from contributions by Nicolas Bernier Abad, 
Piotr  Bogumil,  Reuben  Borg,  Chris  Bosma,  Lucian  Briciu,  Christian  Buelens,  Alessandra  Cepparulo, 
Guillaume  Cousin,  Oliver  Dieckmann,  Christian  Gayer,  Susanne  Hoffmann,  Stefan  Kramer,  João 
Miguel  Leal,  Jakub  Mazur,  Vito  Ernesto  Reitano,  Milan  Výškrabka,  Rupert  Willis,  Przemysław 
Woźniak, Václav Žďárek, Tomasz Zdrodowski and Alexandru Zeana. Chapter 3 “Risks” was prepared 
by  Laura  Bardone  and  Kristian  Orsini.  In  Chapter  4  “Special  issues”,  Special  issue  1  “Alternative 
scenarios on the economic outlook” was prepared by Roberta Cardani (JRC), Olga Croitorov, Lorenzo 
Frattarolo  (JRC),  João  Miguel  Leal,  Beatrice  Pataracchia  (JRC),  Philipp  Pfeiffer,  Marco  Ratto  (JRC), 
Jan Teresinski (JRC) and Milan Výškrabka. The Box I.1.1 “Key assumptions concerning the forecast” 
was prepared by Laura Bardone, Aron Kiss and Kristian Orsini. The Box I.2.1 “Carry-over effects and 
the annual growth forecast for 2022” was prepared by Oliver  Dieckmann. The Box I.2.2 “Member 
States’  vulnerability  matrix”  was  prepared  by  Mattia  Cai  (JRC),  Pablo  Piñero  (JRC),  Paola  Rocchi 
(JRC), Jose-Manuel Rueda Cantuche (JRC) and Przemysław Woźniak. 

The  sections  on  “Member  States”  were  prepared  under  the  supervision  of  Isabel  Grilo,  Massimo 
Suardi,  and  Luc  Tholoniat,  Directors  for  the  “Economies  of  the  Member  States”.  These  sections 
benefited from contributions by Jakob Abou Zeid, Ronald Albers, Lucian Albulescu, Aurelija Anciūtė, 
Martin Åström, Antonino Barbera Mazzola, Paolo Battaglia, Barbara Bernardi, David Berthier, Adrian 
Bodea,  Joël  Boulanger,  Tadej  Breznik,  João  Capella-Ramos,  Francisco  de  Castro  Fernández, 
Alessandro  Cisotta,  Christos  Daoulas,  Milan  Deskar-Škrbić,  Angela  Droussiotou,  Hugo  Ferradáns 
Ramonde,  Miriam  Franzelin,  Norbert  Gaál,  Carmine  Gabriele,  Sotirios  Giannoulis,  Oscar  Gómez 
Lacalle,  Karolina  Gralek,  András  Hudecz,  Zuzanna  Iskierka,  Tim  Jacobs,  Dirk  Kamps,  Szabolcs 
Klubuk,  Daniel  Kosicki,  Radoslav  Krastev,  Anna  Laudwein,  Ivan  Lozev,  Markus  Muench,  Natalie 
Lubenets,  Ruslan  Lukach,  Mart  Maiväli,  Janis  Malzubris,  Dorin  Mantescu,  Robert  Markiewicz, 
Fabrizio  Melcarne,  Gergő  Motyovszki,  Balázs  Pálvölgyi,  Mona  Papadakou,  Alejandro  Paz  Otero, 
Gábor  Márk  Pellényi,  Leonardo  Pérez-Aranda  Alonso,  Arian  Perić,  Paulina  Rogowska,  Marie-Luise 
Rüd,  Marie-Luise  Schmitz,  Sebastian  Schmitz,  Ana  Seco  Justo,  Elisabetta  Severi,  Roberto 
Sigismondo,  Michael  Sket,  Peeter  Soidla,  Gilles  Thirion,  Tsvetan  Tsalinski,  Daniel  Vâlcu,  Milda 
Valentinaitė,  Vasiliki  Vasilopoulou,  Michael  Vedsø,  Alberto  Vidan  Bermúdez,  Ernestas  Virbickas, 
Martina  von  Terzi,  Kai-Young  Weißschädel,  Bartłomiej  Wiczewski,  Christos  Zavos,  Ingars  Zustrups 
and Pieterjan van der Zwan.  

The  sections  on  “Candidate  Countries”  and  “Other  non-EU  countries”  were  prepared  under  the 
supervision  of  Annika  Eriksgaard  Melander,  Director  of  the  “International  economic  and  financial 
relations,  global  governance”.  These  sections,  and  forecasts  for  all  other  non-EU  economies, 
benefited  from  contributions  by  Moreno  Bertoldi,  Juan  José  Almagro  Herrador,  Piotr  Bogumił, 
Stefan  Bohner,  Bernhard  Böhm,  Uwe  Böwer,  Maria  Gerhardt,  Nikolay  Gertchev,  Dalia  Grigonytė, 

145 

 
 
 
 
 
Marianne Grima, Renata Hrůzová, Sarah Jurreit, Plamen Kaloyanchev, Stefan Kramer, Ivan Kušen, 
Mihai-Gheorghe  Macovei,  Maria  Maierean,  Alexandros  Mouzakitis,  Radostin  Neykov,  José  Ramón 
Perea, Jerzy Pieńkowski, Rafał Raciborski, Antonio Sánchez Pareja, Uwe Stamm, Barbara Stearns-
Bläsing, Vladimír Solanič, András Tari, Rupert Willis and Marta Zakrzewska.  

Support  in  editing  the  report  by  Clara  Gonzalez  Zunzarren,  and  for  its  communication  and 
publication by Nicolas Carpentiers, Manuel De La Red Carino, Robert Gangl, Olivier Glorieux, Tamas 
Nagy,  Sarka  Novotna  and  Yasmina  Quertinmont  under  the  responsibility  of  Matthieu  Hebert,  is 
gratefully acknowledged. 

Follow-up  calculations  were  performed  by  Francesca  D’Auria,  François  Blondeau,  Olga  Croitorov, 
Atanas  Hristov  and  Kieran  Mc  Morrow  under  the  responsibility  of  Björn  Döhring.  Forecast 
assumptions were prepared by Luisa Boa, Puck Boom, Paloma Cortés and Vaclav Zdarek. Statistical 
support  for  the  production  of  the  forecast  was  provided  by  Antonio  Fuso,  Daniel  Grenouilleau, 
Susanne Hoffmann, Ingo Kuhnert, David Zaitegui Perez and Tomasz Zdrodowski. Further statistical 
and layout assistance was provided by Helene Gaston, Manfredi Danielis, Michel Gerday, Szabolcs 
Klubuk, Johann Korner, Anna Chiara Küffel, Gianluca Papa, Jacek Szelożyński and Christos Zavos.  

Valuable  comments  and  suggestions  by  Emiel  Afman,  Laura  Bardone,  Moreno  Bertoldi,  Gerrit 
Bethuyne, Reuben Borg, Stefan Ciobanu, Angela D’Elia, Oliver Dieckmann, Björn Döhring, María José 
Doval  Tedin,  Patrick  D’Souza,  Miroslav  Florian,  Christian  Gayer,  Gabriele  Giudice,  Joern  Griesse, 
Valeska  Gronert,  Martin  Hallet,  Renata  Hruzova,  João  Miguel  Leal,  Zenon  Kontolemis,  Robert 
Kuenzel, Stefan Kuhnert, Paul Kutos, Júlia Lendvai, Milan Lisicky, Maarten Masselink, Gilles Mourre, 
Moisés  Orellana, Kristian  Orsini, Dino  Pinelli, Eric  Ruscher,  Matteo  Salto, Dominique  Simonis,  Uwe 
Stamm, Michael Stierle, Andras Tari, Michael Thiel, Alessandro Turrini, Anneleen Vandeplas, Valerie 
Vandermeulen, Charlotte  Van Hooydonk, Milan  Výškrabka, Florian Wöhlbier, Przemysław Woźniak, 
Javier Yaniz Igal, Vaclav Zdarek and Alexandru Zeana are gratefully acknowledged.  

Secretarial support for the finalisation of this report was provided by Carlos Rodríguez del Río. 

Comments on the report would be gratefully received and should be sent to: 
Directorate-General for Economic and Financial Affairs 
Unit A3: Economic situation, forecasts, business and consumer surveys 
European Commission 
B-1049 Brussels 
E-mail: ecfin-forecasts@ec.europa.eu 

146 

 
 
 
 
 
 
 
Statistical Annex 
European Economic Forecast – Spring 2022 

 
 
Contents 

Output : GDP and its components 

Profiles (q-o-q) of quarterly GDP 
Profiles (y-o-y) of quarterly GDP 

1.  Gross domestic product 
2. 
3. 
4.  GDP per capita 
Final domestic demand 
5. 
Final demand 
6. 
Private consumption expenditure 
7. 
8.  Government consumption expenditure 
9. 
10. 
11. 
12.  Public investment 
13.  Potential GDP 
14.  Output gap relative to potential GDP 

Total investment 
Investment in construction 
Investment in equipment 

Prices 

15.  Deflator of GDP 
16.  Deflator of private consumption 
17.  a) Harmonised consumer prices index 
17.  b) All-items HICP, excluding energy and unprocessed food 
18.  Harmonised consumer prices quarterly profiles 
19.  Deflator of exports of goods  
20.  Deflator of imports of goods  
21.  Terms of trade of goods 

Wages, population and labour market 

22.  Total population 
23.  Total employment in persons    
24.  Total employment in full-time equivalents (ES, FR, IT, NL, EA and EU) 
25.  Unemployment rate 
26.  Compensation of employees per head 
27.  Real compensation of employees per head 
28.  Labour productivity 
29.  Unit labour costs, whole economy 
30.  Real unit labour costs 

Exchange rates 

31.  Nominal bilateral exchange rates  
32.  Nominal effective exchange rates  

General Government 

33.  Total expenditure 

148 

150 
150 
151 
151 
152 
152 
153 
153 
154 
154 
155 
155 
156 
156 

157 
157 
158 
158 
159 
159 
160 
160 

161 
161 
162 
162 
163 
163 
164 
164 
165 

165 
166 

166 

 
 
 
 
 
Interest expenditure 

34.  Total revenue 
35.  Net lending (+) or net borrowing (-) 
36. 
37.  Primary balance 
38.  Cyclically-adjusted net lending (+) or net borrowing (-) 
39.  Cyclically-adjusted primary balance 
40.  Structural budget balance 
41.  Gross debt 

Saving 

42.  Gross national saving 
43.  Gross saving of the private sector 
44.  Saving rate of households 
45.  Gross saving of general government 

Trade and international payments 

46.  Exports of goods and services 
47. 
Imports of goods and services 
48.  Merchandise trade balance (% of GDP) 
49.  Current-account balance (% of GDP) 
50.  Net lending (+) or net borrowing (-) of the nation 
51.  Current-account balance (bn EUR) 
52.  Export markets (goods and services) 
53.  Export performance (goods and services) 

World economy 

54.  World GDP 
55.  World exports of goods and services 
56.  Export shares (goods) in EU trade 
57.  World imports of goods and services 
Import shares (goods) in EU trade 
58. 
59.  World merchandise trade balances (bn USD) 
60.  World current-account balances (bn USD) 
61.  Crude oil prices 

Statistical Annex 

167 
167 
168 
168 
169 
169 
170 
170 

171 
171 
172 
172 

173 
173 
174 
174 
175 
175 
176 
176 

177 
178 
178 
179 
179 
180 
181 
181 

149 

 
 
 
 
 
 
 
 
European Economic Forecast, Spring 2022 

150 

Table 1:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.60.71.41.82.1-5.76.22.01.86.02.61.91.60.71.81.11.1-4.62.91.62.42.74.61.78.2-1.73.04.14.1-3.08.31.02.49.03.73.55.2-1.48.99.04.95.913.55.44.414.65.14.14.1-5.5-0.31.71.8-9.08.33.53.17.15.23.63.5-1.31.92.32.1-10.85.14.03.44.65.54.42.00.41.21.91.8-7.97.03.11.86.53.82.31.1-1.40.40.90.5-9.06.62.41.96.24.32.34.50.11.35.75.3-5.05.52.33.55.44.23.59.9-2.72.74.02.5-3.84.52.02.94.75.04.0Lithuania8.7-0.43.24.04.6-0.15.01.72.65.03.63.44.70.62.92.03.3-1.86.92.22.75.83.72.73.02.57.46.05.9-8.39.44.24.05.06.24.82.30.01.72.42.0-3.85.03.31.64.03.31.62.60.61.22.51.5-6.74.53.91.94.44.91.91.1-1.41.42.82.7-8.44.95.82.74.55.32.44.8-1.02.44.43.3-4.28.13.73.16.44.23.57.32.02.73.82.6-4.43.02.33.63.85.34.33.6-0.71.01.11.2-2.33.51.61.73.42.82.02.2-0.31.51.81.6-6.45.42.72.35.04.32.46.41.41.92.74.0-4.44.22.13.13.84.13.55.50.23.03.23.0-5.83.31.92.73.04.43.22.0-0.42.22.02.1-2.14.72.61.84.32.72.44.8-1.81.72.93.5-8.110.23.43.08.15.63.43.5-0.83.25.44.6-4.57.13.62.67.45.43.25.03.43.35.44.7-2.25.93.73.04.95.24.46.50.64.54.54.2-3.75.92.63.67.05.15.23.50.72.62.02.0-2.94.82.31.43.93.51.72.4-0.11.72.11.8-5.95.42.72.35.04.32.52.60.12.41.71.7-9.37.43.41.66.94.81.71.7-0.31.30.6-0.2-4.51.71.91.82.42.31.13.00.82.22.92.3-3.45.72.92.35.84.52.4Gross domestic product, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanIncorrect slice nameTable 2:29.04.20222021/12021/22021/32021/42022/12022/22022/32022/42023/12023/22023/32023/41.31.72.10.40.3-0.10.00.20.50.80.80.7-1.72.21.7-0.30.2-0.20.60.70.80.70.60.53.32.41.01.8-0.7-1.20.20.40.80.91.01.19.74.61.2-5.4::::::::4.11.02.00.4::::::::-0.51.12.62.20.30.10.40.81.11.00.90.70.21.53.00.80.00.40.40.40.40.50.50.50.32.72.50.7-0.20.00.30.40.50.50.50.51.71.61.70.7::::::::0.02.70.70.02.1-0.6-0.40.60.81.21.21.2Lithuania1.71.20.71.30.9-1.3-0.10.81.00.90.80.83.80.00.50.50.60.60.60.70.70.70.70.73.01.03.32.3::::::::-0.53.82.01.00.20.20.40.40.40.40.40.4-0.44.13.4-1.52.5-0.30.20.40.70.60.60.5-2.94.42.71.72.6-1.50.90.80.80.80.70.61.52.01.35.40.2-1.5-1.10.41.51.51.51.5-1.41.90.40.30.6-0.41.41.50.80.80.60.4-0.11.81.00.70.4-0.50.00.50.60.60.60.4-0.12.22.20.30.20.10.50.60.70.60.60.51.80.90.81.00.20.30.50.60.90.90.91.0-0.31.41.70.80.7-1.00.20.50.81.01.21.2-0.12.31.43.0-0.6-0.40.10.30.60.70.70.77.40.91.4-0.10.62.11.70.90.50.20.71.61.72.20.92.01.0-0.20.20.70.70.70.80.91.71.92.51.61.0-0.40.20.71.01.00.90.81.91.60.4-0.10.41.01.21.00.50.81.01.21.30.71.71.0-0.40.40.40.40.30.30.30.30.12.12.20.50.40.10.50.60.70.60.60.6-1.25.60.91.30.40.20.60.60.40.20.30.0-0.50.6-0.71.10.30.60.60.60.40.40.40.31.51.60.61.7-0.40.90.90.60.50.50.40.4LuxembourgProfiles (qoq) of quarterly GDP, volume (percentage change from previous quarter, 2021-23)BelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaCroatiaMaltaNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaDenmarkCzechiaJapanUnited StatesNote: See note 10 for aggregation details for the EU and EA aggregates.HungaryPolandRomaniaSwedenEUUnited Kingdom 
  
  
Statistical Annex 

151 

Incorrect slice nameTable 3:29.04.20222021/12021/22021/32021/42022/12022/22022/32022/42023/12023/22023/32023/40.115.25.15.74.62.70.60.30.51.52.32.8-2.810.42.91.83.71.30.31.42.02.92.82.63.112.19.38.84.50.90.0-1.30.22.33.13.911.920.711.310.0::::::::-1.415.111.47.7::::::::-4.117.83.55.56.45.33.01.62.43.43.93.81.719.13.55.55.34.21.61.21.71.81.81.90.117.73.96.25.82.90.70.51.31.92.12.2-2.013.35.75.9::::::::-0.410.14.82.74.71.70.81.60.42.23.84.5Lithuania-0.910.65.03.15.91.50.70.20.32.63.63.75.612.74.84.81.62.22.42.52.62.72.72.7-0.516.012.710.0::::::::-2.011.05.36.47.13.41.71.11.41.61.61.7-4.112.75.25.68.74.10.92.81.01.92.32.4-5.416.54.45.911.85.53.62.71.03.43.23.02.615.54.710.59.25.42.8-2.1-0.92.24.96.10.210.01.21.23.20.92.03.23.44.63.72.5-0.77.83.63.44.01.60.60.30.61.72.32.3-0.914.64.14.75.03.01.21.61.92.52.52.4-1.47.45.04.73.12.42.11.62.33.03.43.8-2.38.73.63.64.62.10.60.30.42.53.54.2-0.28.63.86.86.23.41.9-0.70.51.72.42.8-0.516.914.69.82.84.04.35.35.23.32.33.0-1.317.66.57.06.33.72.91.71.52.53.13.2-1.011.06.07.97.14.72.41.51.53.03.83.8-0.412.78.03.92.31.72.63.63.83.63.43.60.09.23.84.73.03.11.60.91.61.51.31.2-0.914.04.24.95.23.01.41.51.92.42.62.5-5.522.86.96.68.32.82.51.81.91.91.61.0-1.16.61.00.41.21.22.31.81.91.71.51.20.88.03.13.52.21.71.91.21.81.51.21.1LuxembourgProfile (yoy) of quarterly GDP, volume (percentage change from corresponding quarter in previous year, 2021-23)BelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaCroatiaMaltaNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaDenmarkCzechiaJapanUnited StatesNote: See note 10 for aggregation details for the EU and EA aggregates.HungaryPolandRomaniaSwedenEUUnited KingdomTable 4:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.1-0.20.91.41.6-6.15.81.31.25.62.21.51.70.81.30.80.8-4.62.80.82.22.74.51.68.9-1.43.23.93.6-3.38.3-1.92.09.03.83.62.8-2.38.07.73.54.712.64.23.113.43.92.93.8-5.50.21.91.9-8.98.83.93.57.45.53.91.7-2.02.01.91.3-11.35.23.02.84.04.83.61.3-0.20.81.41.5-8.16.72.51.46.33.52.10.5-1.90.41.10.7-8.67.21.81.36.34.32.42.8-2.31.44.43.9-6.14.50.42.34.23.02.310.9-1.23.74.83.2-3.15.52.83.65.35.64.5Lithuania10.11.14.35.04.9-0.24.71.61.85.24.34.03.1-1.40.50.01.2-3.35.2-0.60.53.81.70.82.41.95.12.41.8-10.38.52.02.02.33.52.12.0-0.41.21.81.3-4.34.52.71.13.62.81.02.10.30.32.01.0-7.14.02.01.14.04.41.40.9-1.31.83.02.7-8.54.95.82.74.55.22.34.5-1.32.34.12.4-4.97.92.82.66.23.93.37.32.02.63.62.5-4.53.21.73.33.75.24.23.3-1.10.71.01.1-2.53.21.11.63.42.81.91.6-0.61.31.61.3-6.55.42.01.94.84.12.17.02.42.63.44.8-3.84.92.73.74.54.74.15.2-0.12.92.82.6-6.13.4-1.51.82.84.23.01.7-0.91.61.51.7-2.34.30.91.13.92.42.04.7-1.62.43.94.1-7.614.73.43.08.76.13.93.7-0.63.55.54.6-4.37.51.72.37.65.63.45.13.13.45.44.8-2.16.5-1.52.35.05.44.67.31.45.05.14.7-3.26.33.44.47.85.75.83.0-0.11.50.81.0-3.64.21.91.13.63.21.42.0-0.31.61.91.6-6.05.41.61.94.94.22.41.9-0.71.61.01.1-9.77.13.11.36.64.51.41.6-0.31.40.80.0-4.22.12.32.32.62.61.12.0-0.11.42.31.8-3.85.52.51.95.33.91.9Gross domestic product per capita (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

152 

Table 5:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.61.11.52.51.8-6.15.72.22.05.63.32.20.90.62.01.71.8-4.02.22.32.72.74.51.710.5-3.13.24.52.83.37.6-2.01.88.82.03.06.0-2.88.5-2.843.5-14.8-16.74.24.0-13.14.33.44.6-7.0-0.41.41.1-3.57.12.41.44.72.52.04.5-3.11.73.01.7-8.94.72.13.44.45.14.22.40.31.51.42.1-6.76.62.71.46.53.51.71.1-2.00.41.3-0.2-8.56.62.71.86.24.52.55.9-0.61.53.55.9-3.12.12.92.74.42.52.112.7-5.22.25.23.0-3.98.83.22.94.25.44.2Lithuania10.9-3.33.53.41.6-3.85.82.92.96.64.44.02.82.62.70.44.7-2.37.32.92.45.35.03.04.41.05.18.77.2-3.68.74.73.26.05.24.52.1-0.81.52.43.0-4.33.73.42.13.23.91.72.30.61.32.40.6-5.84.82.91.95.04.32.01.1-2.71.63.23.1-5.65.04.42.74.64.02.45.0-2.51.65.03.3-4.610.83.22.78.64.93.85.4-0.13.03.53.9-5.23.82.83.83.46.14.73.60.21.12.7-0.4-2.13.51.91.43.12.81.82.2-0.81.61.82.5-6.24.22.62.34.24.22.29.7-0.81.15.44.80.15.32.43.32.72.73.24.4-0.72.84.83.2-5.77.61.92.76.04.42.73.1-0.82.22.80.80.04.72.21.84.22.52.35.3-2.91.54.83.4-2.83.23.34.45.84.44.32.7-2.53.37.16.8-2.75.82.61.54.86.02.95.52.53.05.63.6-2.97.63.83.06.15.84.411.2-0.84.45.95.6-2.27.02.93.77.44.95.33.20.93.11.70.2-3.35.52.40.74.23.21.52.5-0.61.82.12.5-5.74.52.62.34.34.22.42.70.02.81.21.6-10.18.73.81.97.25.22.11.0-0.11.00.60.2-3.70.71.61.71.82.31.03.00.42.33.12.4-3.16.63.32.16.94.72.4Domestic demand, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 6:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220233.60.92.71.61.9-5.87.52.72.97.53.52.52.91.12.51.91.6-5.74.62.33.24.35.62.911.70.43.04.24.4-0.312.70.33.29.84.33.75.5-0.511.45.922.5-0.94.15.44.64.65.44.55.0-6.10.83.42.2-8.610.54.93.87.45.74.14.5-2.22.52.71.9-11.97.15.13.86.36.45.02.60.51.92.22.0-8.87.24.02.96.94.63.01.8-1.71.01.50.2-9.78.23.32.47.85.23.24.50.03.55.16.6-3.97.12.43.65.24.64.112.6-2.42.94.92.7-3.37.82.53.35.15.24.1Lithuania10.80.54.24.85.2-1.910.30.63.09.04.84.25.71.94.12.85.50.49.13.63.09.14.23.05.24.76.32.77.0-4.98.45.24.25.55.94.33.60.42.93.42.5-4.55.13.62.84.94.62.33.60.81.83.41.6-7.67.54.22.66.26.03.22.0-1.72.93.53.4-9.67.26.73.16.35.62.97.2-1.33.65.63.9-6.511.94.04.310.16.24.910.41.84.04.32.4-6.26.82.95.67.36.35.34.5-0.31.42.41.5-3.63.82.02.34.43.92.73.2-0.22.52.42.5-7.16.33.53.16.05.23.210.60.43.23.94.5-4.87.03.23.65.34.84.18.51.33.94.32.4-6.26.51.63.17.14.54.13.6-0.12.63.02.4-2.75.83.52.95.64.13.15.5-2.63.14.44.5-9.511.75.04.810.47.75.87.3-0.44.76.16.2-4.27.83.73.57.57.65.66.83.24.66.14.2-1.89.24.53.38.26.25.111.50.86.45.85.5-4.28.43.34.18.05.55.54.40.83.12.52.0-3.76.12.91.54.93.72.23.50.02.72.72.7-6.66.53.53.16.15.23.43.10.22.72.02.0-10.86.34.11.85.75.61.92.0-0.21.51.0-0.1-4.92.22.02.03.32.81.33.40.82.33.12.1-4.26.43.52.46.85.02.6Final demand, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

153 

Table 7:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220231.41.51.51.91.8-8.26.44.22.55.15.32.40.60.91.41.41.6-5.90.14.13.70.06.71.69.8-2.73.84.34.1-2.56.42.51.56.63.63.05.3-1.42.63.73.2-11.15.75.74.17.46.74.83.6-4.3-0.41.71.8-7.97.81.51.73.32.52.13.6-2.01.51.71.0-12.04.60.83.84.85.23.82.10.61.21.01.8-7.14.73.42.04.45.11.71.1-1.10.50.90.2-10.65.22.21.45.34.82.05.80.41.15.13.0-5.03.72.22.03.11.91.011.6-3.63.13.00.2-7.44.85.03.82.77.55.2Lithuania11.1-2.23.93.63.1-2.17.33.93.15.64.84.11.92.42.62.72.5-6.97.43.72.94.05.82.83.31.33.48.94.6-10.26.23.83.44.34.65.10.6-0.40.92.20.9-6.63.54.61.92.75.82.21.90.90.81.10.7-8.53.34.12.34.26.32.41.6-1.61.62.63.3-7.14.54.62.34.64.22.43.20.91.23.64.8-6.611.64.12.58.45.13.55.31.22.44.12.7-1.31.21.91.91.74.33.23.71.01.01.70.7-4.13.12.11.73.13.82.21.7-0.21.21.51.3-7.93.53.22.63.25.52.28.61.41.03.76.0-0.48.02.83.06.03.03.43.90.62.83.52.7-6.84.42.02.04.05.52.32.9-0.31.63.51.2-1.34.22.32.13.44.42.84.0-1.80.53.34.1-5.310.02.43.67.83.53.33.1-2.23.15.15.0-1.24.64.82.53.67.13.73.63.23.04.53.9-2.86.04.83.75.96.54.511.9-0.15.87.73.9-5.17.92.93.57.54.24.52.91.72.71.80.7-4.75.83.21.53.73.52.02.00.01.41.81.6-7.33.83.32.73.55.52.32.40.12.82.41.3-10.66.24.82.05.55.91.91.00.30.40.2-0.5-5.31.32.31.61.92.50.93.20.82.52.92.2-3.87.93.42.28.54.82.7Private consumption expenditure, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 8:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220231.51.30.51.42.0-0.44.40.80.33.00.12.00.72.12.31.03.03.53.10.50.23.00.70.54.01.22.31.03.03.03.92.00.35.71.11.34.1-1.42.85.36.89.45.41.51.24.20.0-3.94.7-3.3-1.3-3.51.72.63.7-1.7-4.14.4-3.5-2.25.51.40.22.32.03.33.1-0.50.43.32.71.51.71.51.30.81.0-3.26.31.70.55.40.41.20.5-0.4-0.30.1-0.50.50.60.90.91.31.21.03.72.4-1.83.612.714.88.03.11.87.61.62.43.9-2.72.71.73.42.64.41.10.76.6-0.61.5Lithuania3.0-0.70.20.2-0.3-0.40.50.1-0.10.20.10.01.83.62.44.73.97.74.73.32.04.64.13.71.33.31.512.313.115.86.19.01.49.63.40.73.01.40.61.72.81.05.51.81.84.21.90.81.91.21.01.21.5-0.56.7-1.20.73.4-0.10.41.5-1.1-0.20.62.10.44.11.21.34.52.00.52.80.90.63.02.04.23.90.41.12.41.91.52.91.92.7-0.14.60.91.9-1.70.24.12.71.41.40.70.62.02.00.43.21.6-0.83.20.0-1.01.81.11.11.11.91.13.90.80.53.60.90.83.6-0.31.85.32.08.34.00.31.7-1.00.5-0.91.3-0.11.93.82.53.41.60.61.31.50.71.51.31.60.90.01.5-1.73.71.40.64.3-1.60.93.90.30.92.53.34.13.12.62.22.71.11.41.10.52.71.84.3-0.93.7-0.50.03.70.80.73.91.72.73.56.54.93.41.31.82.01.73.9-1.11.21.03.37.31.80.40.1-0.12.30.70.70.51.41.80.80.3-1.32.80.8-3.02.5-0.9-0.71.81.11.21.22.01.13.80.80.43.40.80.83.01.10.80.44.2-5.914.33.61.412.91.83.21.11.51.21.01.92.32.11.71.42.62.01.01.40.40.11.22.02.01.10.01.61.51.71.1Government consumption expenditure, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

154 

Table 9:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220234.70.22.43.04.4-6.17.8-0.13.010.52.01.61.90.72.03.41.8-2.21.50.82.72.43.53.114.2-4.12.70.06.119.93.3-7.05.011.02.53.68.2-6.320.6-8.999.5-22.9-37.64.25.4-31.84.15.47.6-17.70.1-4.3-3.3-0.319.614.78.515.313.48.25.8-8.52.86.34.5-9.54.38.35.83.77.48.13.5-0.91.53.34.0-8.611.62.02.912.53.92.81.3-4.90.03.11.2-9.117.06.24.115.85.95.68.3-8.16.8-4.92.90.0-6.35.45.85.24.94.819.2-6.9-1.611.86.90.22.91.32.85.55.83.8Lithuania16.6-6.86.210.06.6-1.87.02.74.512.86.06.13.92.81.7-6.29.8-4.612.31.32.110.93.62.711.0-1.311.95.58.4-7.619.32.54.96.58.57.54.5-4.13.73.66.2-4.13.52.92.94.02.62.02.2-0.22.44.44.8-5.24.03.72.38.34.22.3-1.0-7.73.46.25.4-2.76.46.55.25.45.24.37.4-8.91.69.75.5-8.212.33.85.010.38.07.06.8-1.53.42.86.7-11.60.610.813.42.815.712.14.4-1.31.43.6-1.5-0.31.22.13.03.13.63.83.4-2.92.33.16.8-7.04.23.13.55.24.43.915.8-4.20.65.44.50.6-11.04.06.9-2.34.06.96.2-1.92.410.05.9-7.50.93.15.66.410.74.35.0-3.64.64.20.15.15.62.72.36.33.12.87.8-5.82.63.89.8-6.17.66.58.27.410.59.53.6-4.46.716.312.8-7.05.90.91.27.68.43.410.02.52.09.46.1-4.93.84.13.98.77.85.320.8-3.71.6-1.112.94.12.34.88.18.89.512.56.0-0.54.61.4-0.3-0.36.12.02.56.16.12.63.9-2.72.53.46.5-6.24.23.13.65.54.84.13.3-2.34.9-0.10.5-9.55.93.02.25.77.21.60.2-2.12.30.41.0-4.6-1.50.32.10.92.11.23.6-0.93.74.43.1-1.66.13.42.56.83.52.5Total investment, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 10:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220235.01.51.13.94.1-6.38.80.52.510.51.81.3-1.11.40.82.61.12.50.70.21.51.42.42.214.4-5.43.4-9.612.8-3.6-0.80.75.12.13.95.97.0-18.310.310.65.6-5.5-3.36.26.89.97.66.96.6-18.2-6.5-11.0-15.03.710.615.48.714.616.210.55.1-11.30.89.57.1-9.6-2.84.26.8-2.77.69.04.0-2.10.33.04.4-12.014.01.32.515.13.32.01.4-6.1-3.12.02.4-6.722.39.23.221.46.25.012.3-10.2-1.725.615.0-5.70.76.46.46.65.24.718.9-6.4-3.117.81.21.5-6.70.52.54.87.33.4Lithuania15.9-8.43.810.89.8-0.8-1.62.44.612.06.86.02.50.12.81.19.1-7.611.41.32.210.93.62.73.9-4.412.410.812.4-3.83.86.46.57.010.19.52.4-5.84.47.05.4-1.42.32.54.73.02.72.71.4-1.60.45.64.0-3.73.12.62.06.02.92.7-3.4-9.4-0.14.77.51.34.23.33.34.33.33.35.9-11.8-1.49.99.1-4.90.53.55.82.69.79.99.2-5.32.12.5-2.24.5-5.77.15.10.412.510.85.0-1.11.74.7-1.40.01.61.40.01.52.72.42.6-4.30.44.03.3-4.66.32.62.97.43.93.517.90.1-2.80.8-5.9-0.1-11.45.08.1-3.75.07.34.8-3.10.78.35.1-2.70.63.86.35.810.46.44.9-5.84.43.42.110.45.73.12.110.02.92.35.5-6.2-1.34.412.9-4.54.53.03.0:::0.2-6.85.720.713.8-4.25.70.00.87.19.22.48.64.5-1.010.97.5-7.12.43.42.30.15.94.622.8-3.46.2-8.512.72.76.13.27.28.410.410.46.4-2.46.11.90.0-0.40.80.31.62.84.42.33.0-4.00.74.13.6-4.05.82.53.07.04.33.63.1-3.55.61.71.5-10.98.71.31.79.57.62.5-3.7-2.82.6-1.71.7:::::::0.6-5.53.71.10.8-0.80.2-1.11.11.41.72.3Investment in construction, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

155 

Table 11:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220234.5-3.23.41.83.1-5.312.4-1.33.810.32.12.15.9-1.02.74.41.0-11.23.4-0.14.55.45.64.713.8-4.20.315.1-4.9-3.517.80.86.56.75.04.613.91.59.219.1-5.8-28.323.82.16.315.210.37.49.5-21.49.7-0.43.0-4.836.019.89.522.416.38.97.0-7.35.64.73.2-12.916.013.05.515.08.07.52.7-1.02.52.63.0-10.68.5-1.52.211.32.82.41.9-5.32.74.5-0.8-15.018.03.44.915.85.45.20.8-6.117.4-37.1-15.415.4-27.86.27.54.66.37.022.4-9.3-0.53.914.5-2.013.72.13.16.94.34.4Lithuania18.1-7.09.98.03.5-5.524.13.24.513.55.26.27.06.70.1-22.515.1-5.116.41.32.010.93.62.727.8-0.112.8-6.90.8-21.564.6:::::3.8-0.32.80.77.9-12.14.73.10.64.32.91.42.6-0.64.11.34.3-8.74.75.32.713.46.11.13.2-9.610.68.91.8-12.09.613.98.67.79.25.810.3-8.35.410.42.0-14.027.53.84.420.27.74.83.64.13.41.913.9-26.99.717.822.15.423.316.54.0-0.63.8-1.7-4.40.31.05.09.89.27.08.54.7-3.03.53.81.8-11.99.72.74.310.15.44.514.8-9.62.58.815.13.3-10.12.86.6-8.62.77.77.6-1.53.08.92.6-14.11.12.63.08.512.50.05.8-5.05.81.9-4.6-6.513.41.32.96.73.93.412.8-6.06.21.59.9-7.412.312.515.8:::7.0-2.78.512.912.4-9.37.32.11.98.97.46.012.0-0.45.58.03.2-6.78.55.84.017.210.25.419.7-4.0-5.111.65.313.2-1.26.69.59.27.817.47.91.02.90.31.1-8.812.42.53.610.010.02.55.4-2.83.54.22.1-10.99.22.94.410.16.14.63.4-3.94.9-7.7-1.8-16.08.67.51.41.76.61.15.1-1.92.43.50.8:::::::7.32.42.76.33.7-7.011.75.83.612.94.72.6Investment in equipment, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 12:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.02.32.42.62.62.72.72.82.82.93.03.12.02.32.22.42.42.62.52.72.82.62.62.65.15.75.25.35.05.85.76.36.85.96.06.03.83.42.02.02.32.32.02.32.32.22.52.85.34.03.83.22.53.13.64.84.83.14.34.14.34.32.22.12.12.62.72.72.62.72.72.64.04.13.63.43.73.73.63.63.64.04.04.03.23.12.32.12.32.62.93.23.72.83.23.23.63.72.34.92.52.82.72.72.62.92.93.04.25.24.55.65.15.75.26.15.86.17.16.1Lithuania4.04.73.43.23.14.13.23.73.33.53.63.54.64.13.83.94.14.74.04.14.24.34.34.34.12.73.13.23.84.54.24.14.24.74.94.83.94.13.53.43.43.63.33.33.43.63.73.72.73.23.03.13.13.33.53.73.33.33.33.23.93.81.91.81.82.22.53.13.42.53.03.54.14.64.13.73.84.14.75.76.35.26.56.13.33.64.13.73.63.53.24.25.13.64.25.73.63.84.14.34.44.94.14.44.54.94.84.53.23.32.72.72.83.03.03.23.23.13.23.23.94.44.23.13.33.83.35.05.43.94.54.85.65.03.94.14.44.94.74.95.24.85.15.12.83.33.73.43.23.63.53.53.83.63.53.56.34.73.43.54.35.64.85.35.75.56.06.34.23.44.85.86.26.45.85.45.96.57.16.63.45.24.14.74.34.54.14.23.94.54.54.44.15.74.02.73.54.64.25.96.05.56.67.14.14.44.44.94.95.04.84.84.85.05.05.03.33.52.92.93.03.33.23.43.53.43.53.52.23.02.62.62.83.03.13.13.13.33.43.43.83.73.83.73.94.34.44.34.14.24.14.13.83.93.33.23.33.53.33.23.23.33.33.3Public investment (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

156 

Table 13:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.11.41.21.41.51.31.41.51.61.41.61.81.31.01.61.21.00.80.91.01.11.21.31.46.00.62.53.94.13.63.52.42.44.33.63.44.7-0.28.010.79.17.35.55.04.85.95.45.13.3-1.1-2.0-1.3-0.6-0.8-0.10.30.90.21.01.33.61.20.20.81.00.20.51.21.31.01.61.81.81.20.90.90.90.91.21.41.41.21.51.60.8-0.2-0.10.00.0-0.10.20.51.00.31.11.33.72.00.33.23.32.82.42.62.73.03.03.07.3-0.42.02.83.22.22.62.12.03.13.12.9Lithuania6.21.72.13.34.44.24.62.83.34.04.33.93.92.22.42.12.62.32.82.73.02.92.82.92.73.15.96.35.93.23.13.73.83.13.43.81.90.91.01.61.81.51.61.61.71.41.41.32.21.01.11.21.11.01.21.31.41.31.51.61.0-0.40.41.61.61.11.62.02.01.61.81.83.31.81.02.12.72.42.73.13.32.63.03.35.53.62.12.12.21.11.42.02.82.13.03.42.70.50.61.41.41.11.21.51.41.41.61.51.80.81.01.21.20.91.11.31.41.31.61.75.51.82.12.22.11.61.51.51.71.92.22.34.21.72.32.72.51.31.31.61.71.62.22.31.51.01.62.11.91.82.42.32.12.32.22.23.40.00.81.82.51.82.72.92.72.93.13.03.40.51.93.74.23.33.34.03.13.73.93.73.94.03.13.74.03.63.93.63.43.63.83.75.72.53.43.94.13.13.43.13.33.93.94.12.81.72.02.22.01.71.91.71.71.52.02.02.01.01.21.51.51.11.31.51.61.51.81.92.31.11.51.31.10.70.81.31.51.11.51.6:::::::::::::2.51.31.92.02.01.81.82.02.02.12.32.3Potential GDP, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 14:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220230.8-0.4-0.20.91.5-5.5-1.0-0.5-0.3-1.2-0.20.0-0.6-0.80.21.51.5-3.9-2.0-1.4-0.1-2.90.20.55.4-4.0-0.11.92.0-4.50.0-1.5-1.5-0.9-0.8-0.71.1-2.81.80.3-3.5-4.82.52.82.53.02.71.82.5-7.0-13.3-7.2-4.9-12.8-5.3-2.4-0.3-4.7-0.71.53.4-4.3-5.21.02.1-9.1-4.9-2.2-0.2-5.6-1.90.61.6-1.1-1.41.01.9-7.0-1.70.00.4-2.10.10.81.8-1.3-3.20.20.7-8.3-2.4-0.50.3-3.2-0.20.83.10.4-4.83.75.6-2.30.60.31.1-0.30.81.34.8-5.00.83.32.6-3.4-1.6-1.7-0.9-2.4-0.60.5Lithuania3.8-4.30.73.43.6-0.7-0.3-1.4-2.1-0.3-0.8-1.30.9-1.6-1.0-0.50.1-3.90.0-0.5-0.8-1.7-0.8-1.0-0.3-1.32.04.84.8-7.0-1.3-0.9-0.7-4.2-1.7-0.7-0.9-1.3-1.51.21.4-3.9-0.70.90.8-1.40.60.8-0.2-0.5-0.81.72.1-5.7-2.7-0.20.3-2.90.30.6-0.6-1.1-1.62.43.5-6.3-3.30.30.9-3.30.00.53.6-1.2-3.92.93.5-3.21.92.52.31.02.12.30.9-0.2-1.22.52.9-2.7-1.1-0.80.0-2.10.10.90.7-1.1-1.90.40.3-3.1-1.0-0.8-0.5-1.8-0.6-0.10.9-1.5-1.70.91.3-6.0-2.0-0.60.2-2.70.00.71.00.7-0.70.62.5-3.5-1.0-0.41.0-1.70.21.42.8-0.1-0.72.42.9-4.3-2.4-2.2-1.2-3.1-1.1-0.22.7-2.3-2.1-0.6-0.3-4.1-2.0-1.6-1.9-2.2-1.7-1.52.8-0.4-2.02.53.6-6.50.30.81.1-1.31.11.42.7-3.2-0.23.84.1-3.7-0.2-0.5-1.1-1.50.0-0.4-0.91.3-0.92.53.2-2.5-0.6-0.5-0.9-1.30.00.74.0-0.8-1.01.92.0-4.8-2.5-3.0-2.7-2.8-1.7-0.71.1-1.6-0.50.50.4-4.2-1.4-0.8-1.2-2.0-0.5-0.71.0-1.4-1.61.01.4-5.7-1.9-0.70.0-2.5-0.10.51.4-3.1-0.41.31.9-8.2-2.2-0.10.0-3.3-0.2-0.1:::::::::::::0.7-1.8-0.21.11.4-3.7-0.10.81.1-0.61.51.7Output gap relative to potential GDP ¹ (deviation of actual output from potential output as % of potential GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited States¹ When comparing output gaps between successive forecasts it has to be taken into account that the overall revisions to the forecast may have led to changes in the estimates for potential output.PolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

157 

Table 15:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.01.61.51.51.81.34.54.53.02.02.31.61.01.21.72.02.11.63.05.43.62.62.41.87.13.52.74.03.2-0.35.58.13.22.93.02.42.4-0.92.00.74.2-1.2-0.44.84.1-0.22.01.43.11.5-0.9-0.20.2-0.82.14.82.1-0.10.90.43.90.50.51.21.31.12.23.72.41.51.60.92.01.10.71.01.32.50.82.23.00.81.41.42.51.51.01.10.91.40.53.12.41.11.51.43.52.0-0.51.01.1-1.12.74.53.22.41.61.011.02.11.53.92.6-0.16.87.25.13.52.92.0Lithuania4.83.31.63.52.71.56.57.43.04.32.62.03.73.81.71.70.64.36.84.02.12.32.22.22.12.32.62.22.41.51.72.82.61.81.81.52.01.00.82.43.02.32.43.83.32.41.71.51.91.71.81.81.62.31.83.43.21.82.22.13.10.61.61.81.71.90.72.93.11.01.81.43.41.71.12.12.21.22.63.33.71.51.81.73.51.00.22.02.52.42.46.65.51.44.72.21.12.11.32.01.51.62.73.82.31.92.02.32.11.21.11.51.71.62.03.93.11.61.91.56.44.02.54.25.24.26.29.53.93.94.63.51.90.91.52.63.94.44.17.44.73.93.12.52.22.20.80.70.72.62.43.32.31.01.61.53.82.50.42.01.9-0.13.23.82.42.42.11.94.43.32.94.84.86.36.95.64.64.74.53.72.73.00.81.23.24.25.810.07.84.75.42.715.36.13.16.26.83.95.49.54.93.94.44.11.51.71.72.42.51.83.04.33.92.11.41.62.21.41.21.61.91.92.34.43.41.92.11.72.82.01.62.02.05.10.33.82.60.70.41.7-1.1-1.10.80.00.60.9-1.00.51.5-0.50.30.22.71.51.52.41.81.24.26.42.83.62.62.1Deflator of gross domestic product (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 16:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.51.81.22.01.40.62.26.41.92.12.31.71.41.41.01.51.30.63.16.33.03.12.11.74.53.91.73.72.5-0.84.411.22.53.73.92.42.5-0.90.82.02.00.53.86.13.13.63.11.53.11.8-1.20.10.0-1.01.06.31.90.11.00.43.41.80.51.41.00.01.96.21.91.91.21.02.01.10.41.70.80.81.64.13.11.51.91.42.51.90.51.00.6-0.21.75.92.31.82.11.42.92.6-0.91.31.1-0.92.16.23.71.91.71.28.63.21.13.03.00.83.49.43.53.13.82.3Lithuania2.24.80.92.62.10.84.612.53.03.83.12.02.51.81.21.91.70.72.45.92.22.11.91.72.12.61.00.81.91.21.24.53.41.62.11.62.11.11.02.22.61.53.17.42.72.22.21.52.11.91.82.11.81.42.45.52.62.93.12.23.31.20.91.60.80.71.24.52.01.21.81.43.42.30.52.01.3-0.53.85.83.31.72.11.74.82.60.42.32.72.23.39.16.32.84.02.01.12.61.11.31.00.52.04.42.21.81.91.92.21.50.71.51.10.52.35.82.72.22.01.54.33.01.72.42.0-0.63.611.94.72.26.12.21.92.00.92.52.82.83.111.75.43.44.01.91.62.30.60.60.80.52.14.52.31.71.81.62.83.10.21.41.10.32.76.02.52.11.91.44.74.51.63.34.63.36.39.04.15.14.83.42.23.50.21.72.43.45.411.87.34.25.22.29.45.71.73.85.42.45.59.15.34.24.23.01.11.61.12.52.11.11.95.74.02.52.01.22.21.70.71.61.40.72.56.33.12.42.31.62.22.21.22.01.31.02.48.32.51.72.42.0-0.6-0.80.50.70.50.3-0.51.11.5-0.40.40.42.61.81.22.11.51.23.95.92.83.32.52.0Price deflator of private consumption (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

158 

Table 17a:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.02.61.32.31.20.43.27.81.92.72.31.61.81.81.01.91.40.43.26.53.13.12.21.73.94.61.63.42.3-0.64.511.22.54.03.92.12.80.60.20.70.9-0.52.46.13.12.33.11.53.32.9-0.40.80.5-1.30.66.31.90.11.00.43.22.30.51.70.8-0.33.06.31.82.82.10.72.01.90.62.11.30.52.14.93.11.92.11.42.32.40.61.20.6-0.11.95.92.31.82.11.42.52.7-0.40.80.5-1.12.35.22.71.91.71.26.54.80.82.62.70.13.29.43.53.13.60.8Lithuania2.54.71.02.52.21.14.612.53.03.83.12.03.02.70.92.01.60.03.56.82.33.22.21.82.12.91.01.71.50.80.74.52.61.11.61.51.71.90.91.62.71.12.87.42.72.12.21.51.92.31.52.11.51.42.86.03.02.72.52.02.71.90.61.20.3-0.10.94.41.90.81.71.23.62.70.61.91.7-0.32.06.13.31.72.11.75.02.70.42.52.82.02.89.86.82.84.32.21.02.70.91.21.10.42.14.52.31.81.91.92.22.10.71.81.20.32.66.12.72.42.21.45.94.6-0.52.62.51.22.811.95.02.42.91.81.82.81.02.02.63.33.311.74.53.33.42.31.62.40.40.70.70.31.95.12.71.71.91.62.72.90.61.60.80.02.76.12.82.22.01.55.44.90.92.93.43.45.29.04.15.14.83.42.13.70.31.22.13.75.211.67.35.05.22.69.55.80.84.13.92.34.18.95.14.04.02.81.51.90.92.01.70.72.75.33.02.41.91.12.42.40.71.81.40.72.96.83.22.62.51.61.92.91.52.31.71.02.57.03.62.43.22.20.0-0.20.81.00.50.0-0.21.61.5-0.50.20.42.92.11.32.41.81.24.77.33.14.33.32.2Harmonised index of consumer prices (national index if not available), (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 17b:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220231.61.91.71.61.61.51.43.83.41.32.12.01.31.31.41.51.40.92.33.83.72.32.01.83.43.72.02.52.30.22.47.13.42.03.02.92.60.00.60.20.9-0.11.64.34.51.22.02.43.22.0-0.30.50.5-1.0-0.72.61.5-0.90.50.72.81.60.71.01.00.60.73.92.70.61.51.31.71.50.71.31.21.01.22.93.01.11.51.52.12.10.80.80.60.50.82.52.10.71.51.61.41.7-0.10.10.6-0.61.03.23.20.81.31.55.83.61.31.92.71.12.06.74.11.62.22.5Lithuania2.03.51.92.12.52.53.28.63.32.62.02.22.52.41.71.21.81.41.53.83.21.42.21.91.82.11.21.81.40.80.74.42.61.11.71.51.21.71.21.02.22.11.63.73.71.51.71.81.52.01.91.91.62.02.13.93.22.12.32.12.41.40.70.80.50.00.33.72.20.21.51.33.21.80.81.11.81.01.04.42.70.71.41.43.92.50.92.22.52.43.48.13.13.33.52.40.72.41.10.81.00.81.43.82.41.22.02.11.81.71.01.21.20.91.53.53.11.41.81.75.54.5-0.32.12.52.01.99.56.11.62.11.41.52.11.41.82.33.73.88.94.03.52.82.41.42.10.70.50.80.91.12.91.41.11.81.92.62.31.01.11.10.81.84.33.31.61.91.64.64.11.92.33.73.74.58.44.04.34.43.91.43.00.70.62.34.24.28.34.94.14.23.09.05.81.12.73.83.33.17.14.83.13.22.70.91.60.91.21.61.51.64.13.01.51.31.42.01.91.01.21.41.31.84.23.31.72.01.9:::::::::::::::::::::::::::::::::::::::All-items HICP, excluding energy and unprocessed food (national index if not available), (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

159 

Incorrect slice nameTable 18:29.04.20222021/12021/22021/32021/42022/12022/22022/32022/42023/12023/22023/32023/40.82.43.36.49.19.07.75.52.51.82.01.31.72.23.55.46.17.26.46.34.53.02.72.30.62.85.49.112.513.310.98.34.52.21.71.6-0.11.53.05.45.96.86.45.24.23.12.72.5-2.1-0.61.33.76.68.16.44.03.51.91.11.10.52.33.45.87.97.66.04.01.81.71.92.01.01.82.23.34.25.05.35.04.13.02.82.50.71.22.13.76.06.66.24.52.72.52.11.9-0.51.63.24.65.75.75.24.13.22.82.42.3-0.12.33.77.19.212.19.27.66.53.62.61.3Lithuania0.73.25.29.413.914.512.99.04.22.52.72.51.03.63.65.76.88.36.75.23.42.32.31.30.10.10.52.14.34.74.34.74.51.52.12.31.81.82.45.38.98.97.85.12.92.42.72.61.52.63.13.95.67.16.25.03.63.22.72.50.2-0.11.22.44.46.24.13.02.01.91.81.8-0.62.12.34.56.36.85.85.64.43.82.92.31.02.13.44.88.511.110.49.29.56.35.85.61.12.11.93.14.86.04.13.03.02.32.11.81.11.82.84.66.16.96.25.23.62.72.52.20.22.22.96.08.912.714.012.19.45.13.32.62.22.83.35.010.213.112.411.36.83.83.63.70.61.72.03.55.45.75.14.43.22.82.62.40.72.23.14.66.47.16.14.83.22.62.82.53.35.35.07.18.38.710.09.06.54.62.72.63.94.65.17.39.013.113.311.011.56.75.75.72.33.14.36.68.29.09.39.26.86.24.43.31.92.32.53.94.95.85.64.93.73.02.92.41.42.23.14.96.67.36.75.64.13.02.72.40.92.12.74.45.57.07.58.05.04.03.02.5-0.5-0.7-0.20.50.71.81.82.01.91.61.31.11.94.85.36.77.97.97.46.14.53.12.52.3LuxembourgHarmonised index of consumer prices (national index if not available), (percentage change on preceding year, 2021-23)BelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaCroatiaMaltaNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaDenmarkCzechiaJapanUnited StatesHungaryPolandRomaniaSwedenEUUnited KingdomTable 19:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220231.82.1-1.03.00.5-2.210.010.00.17.21.21.10.31.10.00.90.4-0.74.512.52.74.25.11.43.22.6-0.22.4-0.4-2.010.410.52.54.63.21.9-1.00.50.1-3.82.1-7.0-4.26.23.8-0.82.11.32.11.2-3.35.8-0.5-12.818.410.22.76.02.52.22.22.0-0.32.10.1-1.29.011.51.67.02.51.50.81.1-0.30.71.1-1.56.28.81.84.42.91.01.41.70.02.00.6-0.55.56.44.23.81.62.23.21.80.80.60.7-1.21.68.00.84.72.71.611.04.30.43.2-0.2-1.114.39.54.08.04.02.0Lithuania5.24.5-2.03.7-0.1-5.05.95.62.43.62.11.14.53.20.52.6-0.4-0.27.06.72.35.01.21.01.10.0-1.03.31.4-1.45.610.05.03.52.52.01.52.1-1.42.1-0.2-3.710.110.40.77.11.00.31.41.4-0.41.8-1.0-1.22.53.01.12.41.41.41.41.6-1.32.2-0.3-2.57.86.00.94.32.31.32.41.2-0.32.7-0.6-2.05.89.62.83.93.61.91.60.6-1.31.6-0.3-2.75.49.52.74.96.71.50.30.3-1.05.0-0.7-5.313.69.92.05.73.51.81.01.4-0.41.30.4-2.05.99.72.24.63.01.312.03.8-0.62.81.7-2.017.411.53.516.04.03.0-0.2-0.40.0-0.71.01.05.05.93.03.61.71.62.22.5-0.61.1-0.2-1.52.47.03.12.32.61.33.43.1-1.60.70.5-4.16.95.04.03.21.91.4-0.22.20.22.91.74.77.75.5-1.24.51.01.03.44.60.81.63.22.89.911.05.58.95.42.79.38.4-2.85.42.20.711.411.83.55.03.52.50.80.20.55.63.4-4.55.612.55.83.01.41.61.11.6-0.31.50.7-1.66.29.72.54.73.01.41.45.10.23.62.0-3.25.64.61.30.52.51.50.2-4.51.70.8-3.8-2.87.04.30.48.01.50.02.91.9-2.13.6-1.6-4.014.210.32.012.63.42.0Price deflator of exports of goods in national currency (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

160 

Table 20:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.33.0-1.74.0-0.4-2.910.812.8-0.87.81.00.90.61.4-1.41.9-0.6-3.59.114.60.97.75.91.21.53.2-0.82.40.2-3.19.813.01.55.83.61.70.50.30.12.7-2.7-5.33.57.33.40.82.61.42.52.7-4.07.20.9-9.017.712.01.57.93.53.22.03.0-0.62.90.6-3.99.214.70.58.02.61.61.11.7-1.72.3-0.1-2.68.113.90.45.93.90.32.82.9-2.23.2-0.9-4.912.013.32.57.23.71.72.72.2-1.52.11.0-0.42.810.00.84.72.71.68.44.7-1.01.6-1.1-4.211.513.02.510.06.03.5Lithuania3.84.8-3.04.7-1.4-6.413.29.52.38.52.21.13.32.8-0.43.4-0.2-3.68.710.02.25.71.01.00.71.2-1.30.01.5-1.02.113.05.83.52.52.01.42.8-2.12.2-1.1-5.112.514.0-0.18.31.20.11.72.2-0.82.3-0.1-2.35.86.20.44.62.41.71.61.7-2.32.9-0.7-4.07.08.8-1.64.62.31.33.12.4-1.02.8-1.0-2.88.712.12.34.63.91.92.12.0-1.02.50.1-2.36.511.02.66.75.11.42.91.3-2.04.1-0.1-7.013.011.02.25.93.61.71.62.2-1.62.6-0.5-3.89.613.20.87.03.71.16.83.5-1.52.2-0.1-6.015.011.94.314.56.02.00.30.5-0.7-0.60.6-1.04.98.22.93.12.51.01.02.3-1.32.8-0.1-2.98.810.92.85.03.51.61.62.5-0.51.10.2-0.37.48.04.03.41.71.30.82.8-0.54.01.22.711.710.4-1.76.51.90.52.65.1-0.82.91.7-0.411.515.55.08.85.12.02.68.5-2.44.80.2-2.310.512.04.07.04.02.01.40.2-0.16.72.3-5.45.114.55.54.53.41.71.52.3-1.52.7-0.2-3.49.513.11.36.93.71.20.54.4-0.22.80.9-1.04.214.41.51.52.51.55.9-1.3-0.46.1-4.7-8.917.611.30.45.42.00.84.12.3-3.02.8-2.1-2.87.87.91.37.02.61.6Price deflator of imports of goods in national currency (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 21:29.04.20225-year  2003 - 072008 - 122013 - 17201820192020202120222023202120222023-0.6-0.90.7-1.00.90.7-0.7-2.51.0-0.60.20.1-0.3-0.41.4-1.01.12.9-4.2-1.81.8-3.2-0.70.21.6-0.60.70.0-0.71.10.6-2.21.0-1.1-0.40.2-1.60.20.0-6.44.9-1.8-7.5-1.00.4-1.6-0.5-0.1-0.3-1.50.8-1.2-1.4-4.10.6-1.61.2-1.8-1.0-1.00.3-1.00.3-0.7-0.52.8-0.2-2.81.1-0.9-0.1-0.1-0.3-0.61.4-1.51.31.1-1.7-4.51.3-1.5-0.90.6-1.4-1.12.3-1.21.64.6-5.8-6.11.7-3.2-2.00.50.5-0.42.3-1.4-0.3-0.8-1.1-1.80.00.00.00.02.4-0.41.41.60.93.22.5-3.11.5-1.8-1.9-1.4Lithuania1.4-0.41.0-1.01.31.5-6.4-3.50.1-4.6-0.10.01.10.40.9-0.7-0.23.6-1.5-3.00.1-0.70.20.00.4-1.20.33.2-0.1-0.53.4-2.7-0.80.00.00.00.1-0.70.7-0.20.91.5-2.1-3.20.8-1.1-0.20.2-0.3-0.80.4-0.6-0.91.2-3.2-3.00.7-2.1-0.9-0.2-0.20.01.0-0.80.41.60.8-2.62.5-0.30.00.0-0.7-1.10.6-0.10.40.8-2.6-2.20.5-0.7-0.30.0-0.5-1.3-0.3-0.9-0.3-0.5-1.1-1.40.1-1.71.60.1-2.5-1.01.10.8-0.61.80.5-1.0-0.2-0.2-0.10.1-0.6-0.71.2-1.30.91.8-3.5-3.11.4-2.3-0.60.24.90.30.90.71.94.32.1-0.3-0.81.3-1.91.0-0.5-0.90.7-0.20.42.00.2-2.10.10.5-0.80.61.20.30.8-1.6-0.11.5-5.9-3.50.3-2.6-0.9-0.31.80.6-1.1-0.50.3-3.8-0.4-2.80.0-0.20.20.1-1.0-0.60.7-1.00.52.0-3.6-4.40.5-1.9-0.90.50.8-0.41.6-1.21.53.2-1.5-3.90.50.10.30.66.6-0.1-0.30.62.13.20.8-0.2-0.5-1.9-0.50.5-0.50.00.6-1.01.10.90.4-1.70.2-1.4-1.9-0.1-0.4-0.71.1-1.20.91.9-3.1-3.01.2-2.0-0.60.20.90.60.30.81.1-2.31.3-8.6-0.2-1.00.00.0-5.4-3.32.1-5.00.96.7-9.0-6.30.02.5-0.5-0.8-1.1-0.41.00.80.6-1.26.02.30.75.20.80.4Terms of trade of goods (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

161 

Table 22:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220230.60.90.50.50.50.50.40.70.60.40.40.4-0.1-0.10.50.30.20.10.00.70.20.00.10.1-0.6-0.3-0.10.30.40.30.02.90.40.0-0.1-0.12.30.90.91.21.41.10.81.11.31.11.11.20.30.0-0.5-0.2-0.1-0.1-0.4-0.4-0.4-0.3-0.3-0.41.80.7-0.10.40.80.5-0.11.00.60.60.70.80.70.50.40.40.30.30.30.60.30.30.30.30.60.5-0.1-0.2-0.2-0.5-0.60.60.50.0-0.1-0.11.62.4-0.11.21.41.10.91.91.21.11.11.1-1.0-1.6-0.9-0.8-0.7-0.6-0.9-0.8-0.7-0.5-0.5-0.5Lithuania-1.3-1.6-1.1-0.9-0.30.00.30.20.7-0.2-0.6-0.61.52.02.42.02.11.51.62.92.22.02.02.00.50.62.23.64.02.20.92.12.02.62.62.60.30.50.40.60.70.60.50.50.50.40.50.50.50.30.90.50.50.40.41.90.70.40.40.40.2-0.1-0.4-0.20.00.10.00.00.00.10.10.10.20.40.10.30.80.70.20.90.50.20.20.20.10.00.10.10.10.1-0.20.60.30.10.10.10.30.50.30.10.10.20.20.50.10.10.10.10.50.30.20.20.30.10.00.70.40.20.20.2-0.5-0.9-0.6-0.7-0.7-0.6-0.6-0.6-0.6-0.6-0.6-0.60.20.40.20.30.40.30.03.40.80.20.20.20.30.50.60.50.40.20.41.70.70.30.40.40.0-0.2-0.7-0.9-0.6-0.5-3.90.00.0-0.5-0.5-0.5-0.2-0.3-0.3-0.10.0-0.2-0.41.90.2-0.2-0.2-0.2-0.10.2-0.10.0-0.1-0.1-0.55.30.7-0.1-0.1-0.2-0.7-0.8-0.5-0.6-0.5-0.5-0.4-0.8-0.8-0.8-0.6-0.60.50.81.11.21.00.70.60.40.30.30.30.30.40.20.20.20.20.1-0.11.10.40.10.10.10.60.80.70.60.50.40.30.30.30.30.30.30.1-0.1-0.1-0.2-0.2-0.4-0.3-0.4-0.4-0.2-0.20.00.90.80.80.60.50.40.10.30.50.50.50.5Total population (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 23:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220231.00.80.81.51.60.01.81.00.80.90.41.20.30.91.01.40.9-0.80.00.80.50.00.90.41.8-1.41.60.91.3-2.70.10.71.00.21.40.63.8-3.03.23.22.9-1.53.92.80.83.01.71.71.6-2.00.64.60.9-1.20.51.21.21.11.11.03.7-2.91.22.22.8-4.12.42.81.12.31.71.40.70.10.51.01.2-0.91.81.10.41.40.60.51.2-0.40.30.90.5-2.10.60.61.1-0.31.00.73.50.20.85.33.8-0.51.20.91.81.22.22.32.3-3.80.41.5-0.1-2.3-2.60.70.51.20.50.3Lithuania0.7-2.41.31.40.6-1.61.20.20.10.60.50.03.12.62.73.63.51.93.12.62.52.93.43.21.02.05.46.05.72.81.62.12.02.42.52.50.80.20.72.72.0-0.51.82.01.10.91.10.31.20.91.01.71.1-1.62.12.90.91.71.90.6-0.3-2.01.02.30.8-1.92.11.00.91.80.80.50.9-0.81.13.22.5-0.61.40.91.51.11.31.41.30.31.42.01.0-1.9-0.61.90.60.31.21.01.30.30.02.51.8-1.92.01.00.42.01.50.71.2-0.40.81.61.3-1.51.11.30.80.81.00.73.0-1.60.5-0.10.3-2.30.20.20.40.00.90.60.9-0.11.11.30.2-1.70.12.20.30.50.50.40.9-1.01.11.51.4-0.72.61.91.11.71.31.02.0-2.00.82.63.1-1.21.21.61.81.61.31.20.0-0.72.72.31.1-1.12.01.70.63.02.00.82.00.41.10.50.00.01.50.40.30.30.10.0-0.2-1.80.00.10.1-1.8-8.90.80.81.10.60.50.60.51.61.60.6-1.31.32.10.90.41.71.01.1-0.40.91.51.1-1.40.71.20.70.81.00.61.00.21.51.21.1-0.5-0.80.91.00.00.91.00.6-0.50.61.80.9-0.50.00.30.30.60.60.61.0-0.61.61.71.2-5.83.23.31.13.13.01.2Total employment in persons (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesNote: For the countries publishing also employment in full-time equivalents (see note 6) as well as the EU and EA aggregates, this table now also displays employment in persons, limiting the comparability to figures published in previous forecasts.PolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

162 

Table 24:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220233.0-3.41.32.22.6-7.66.63.31.64.52.82.30.80.00.51.01.3-0.91.81.10.41.40.60.50.8-1.00.10.80.1-10.37.52.41.85.94.02.00.70.00.93.02.20.61.82.01.10.91.10.3Euro area0.9-0.60.81.61.2-3.31.11.60.92.01.61.00.8-0.60.81.41.0-2.70.71.50.81.71.40.9ItalyNetherlandsEUTotal employment in full-time equivalents (percentage change on preceding year, 2003-2023)averagesAutumn 2021forecastSpring 2022forecastSpainFranceTable 25:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220238.37.78.26.05.55.86.35.85.66.26.35.89.56.34.33.23.03.73.63.33.23.63.43.27.811.67.05.44.56.96.26.86.96.85.75.24.813.010.15.85.05.96.24.65.07.56.86.29.814.725.019.717.917.614.713.713.115.315.014.59.719.121.915.314.115.514.813.413.015.214.313.98.69.010.19.08.48.07.97.67.68.08.07.97.68.512.110.69.99.39.59.58.99.89.39.24.67.014.28.47.17.67.57.87.37.57.16.69.415.310.27.46.38.17.67.37.17.36.96.6Lithuania8.413.29.36.26.38.57.17.27.27.16.36.04.44.96.15.65.66.85.35.25.16.15.85.77.06.55.23.73.64.43.53.63.64.03.83.75.75.87.54.94.44.94.24.04.23.53.63.65.55.16.05.24.86.06.25.04.85.04.64.58.612.613.17.26.77.06.65.75.56.76.56.46.16.98.75.14.45.04.84.84.64.64.54.415.312.611.36.55.76.76.86.76.36.86.45.68.37.98.87.56.87.77.77.26.97.76.96.58.79.910.88.27.68.07.77.37.07.97.57.312.010.310.46.25.26.15.35.45.35.14.64.47.36.45.02.22.02.62.82.62.62.72.62.44.76.76.55.15.05.65.14.84.74.84.54.312.411.815.08.56.67.57.66.36.06.76.25.86.69.96.63.63.34.14.13.84.04.13.12.916.69.37.83.93.33.23.44.13.93.33.13.08.88.57.95.34.96.15.65.55.35.04.84.56.77.97.66.57.08.58.87.87.08.27.16.79.39.610.17.46.87.27.06.76.57.16.76.55.17.55.74.13.84.54.54.04.04.94.74.44.54.63.42.42.42.82.82.72.62.82.62.45.28.45.63.93.78.15.43.63.55.54.24.0Unemployment rate ¹ (number of unemployed as a percentage of total labour force, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited States¹ Series following Eurostat definition, based on the Labour Force Survey.PolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

163 

Table 26:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.52.51.21.82.0-1.54.26.05.53.65.12.00.92.22.52.93.40.43.43.44.03.13.32.914.83.35.88.68.45.37.67.04.54.63.74.65.40.41.42.53.42.43.63.87.84.25.06.15.6-0.9-3.2-3.80.6-0.71.43.52.20.00.61.53.72.60.41.82.51.3-0.62.83.0-0.32.11.72.92.41.51.7-0.2-2.94.93.83.34.33.12.33.22.00.62.01.82.8-0.92.51.30.71.51.14.52.7-2.01.54.4-3.24.74.14.52.52.72.421.81.57.38.17.85.511.05.66.07.15.06.7Lithuania13.92.66.37.910.67.311.48.76.29.36.75.53.52.22.12.81.90.45.14.83.61.42.61.93.73.33.33.93.8-0.75.53.82.92.91.91.92.62.51.11.72.83.52.13.13.72.32.62.82.42.22.02.92.81.73.41.52.62.12.33.13.30.41.13.94.82.03.84.22.62.23.03.06.62.71.93.95.03.55.43.65.53.41.23.68.33.83.16.06.83.65.97.87.05.05.95.43.12.90.71.31.20.44.43.33.01.92.62.82.62.41.52.12.20.74.03.43.42.62.92.47.79.87.29.76.97.29.59.77.79.79.07.96.32.53.48.17.23.25.72.45.36.06.94.93.52.61.61.61.92.33.23.62.91.72.22.75.42.0-1.03.90.42.15.63.02.72.03.32.48.42.52.46.46.93.09.28.76.57.79.46.42.75.83.38.17.35.65.09.58.07.18.36.718.07.98.512.910.92.65.78.37.06.87.59.93.93.02.33.83.02.54.32.73.72.22.52.52.82.61.62.72.70.94.13.83.72.93.32.85.31.52.32.54.22.25.44.53.02.83.02.0-0.4-1.10.71.40.8-0.80.20.90.91.41.41.44.12.42.23.23.06.75.65.43.93.13.83.6Compensation of employees per head (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesNote: See note 6 on concepts and sources where countries using full time equivalents are listed.PolandRomaniaSwedenEUUnited KingdomJapanTable 27:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220230.10.70.0-0.20.6-2.12.0-0.43.41.52.80.3-0.50.81.51.42.0-0.30.3-2.71.00.01.21.29.9-0.64.04.75.76.13.1-3.81.90.9-0.22.22.81.30.60.61.31.9-0.2-2.14.50.61.94.52.4-2.6-2.0-3.90.60.30.4-2.60.3-0.1-0.41.10.30.8-0.10.41.51.3-2.5-3.21.1-2.10.90.70.91.31.00.0-1.0-3.73.2-0.20.22.71.10.80.70.10.01.11.23.0-2.5-3.2-1.0-1.2-0.5-0.21.60.1-1.10.23.3-2.32.5-2.00.80.51.01.212.1-1.66.14.94.64.77.3-3.52.43.91.14.3Lithuania11.5-2.15.45.28.36.46.5-3.43.15.33.53.50.90.40.90.90.3-0.32.6-1.01.4-0.70.70.21.60.62.33.11.9-1.84.2-0.7-0.41.3-0.20.20.51.30.1-0.50.11.9-0.9-4.01.00.10.41.30.30.20.20.91.00.31.0-3.80.0-0.7-0.80.9-0.1-0.80.22.33.91.32.6-0.30.61.01.11.63.10.41.41.93.64.11.6-2.12.11.6-0.91.93.31.22.73.64.01.42.6-1.10.72.11.83.31.90.3-0.40.00.3-0.12.4-1.10.80.10.60.90.40.90.70.61.00.21.7-2.20.70.40.80.93.26.65.57.14.87.85.7-2.02.87.42.85.54.40.52.55.44.30.42.6-8.3-0.12.52.82.91.80.31.01.01.21.91.1-0.90.60.00.41.12.5-1.0-1.22.4-0.71.82.9-2.90.1-0.11.31.03.6-1.90.93.02.3-0.32.8-0.32.32.44.42.90.52.23.16.34.82.1-0.4-2.10.62.83.04.47.92.16.68.85.20.20.2-0.81.62.43.16.62.81.41.21.30.81.42.4-2.8-0.2-0.30.41.30.50.90.81.11.30.21.6-2.30.60.51.01.23.0-0.71.10.52.81.12.9-3.50.51.10.60.00.2-0.30.20.70.4-1.10.7-0.2-0.61.81.01.01.50.71.01.11.55.51.7-0.41.1-0.21.21.5Real compensation of employees per head ¹ (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited States¹ Deflated by the price deflator of private consumption.Note: See note 6 on concepts and sources where countries using full time equivalents are listed.PolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

164 

Table 28:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220231.6-0.10.60.40.5-5.74.41.01.05.02.20.81.3-0.20.8-0.30.1-3.82.80.81.92.73.61.36.3-0.11.53.22.8-0.38.20.31.48.82.32.91.31.75.55.72.07.59.22.63.611.23.32.42.4-3.6-0.9-2.80.9-7.97.82.21.95.94.02.60.42.20.70.1-0.5-3.5-1.40.71.70.12.72.11.20.40.70.90.5-7.05.12.01.45.13.11.80.4-0.40.30.20.41.4-0.80.10.00.30.30.40.9-0.10.60.31.4-4.54.31.41.64.11.91.27.41.32.32.52.6-1.57.21.32.43.54.63.7Lithuania7.92.01.92.64.01.53.81.62.54.33.23.31.6-2.00.2-1.6-0.2-3.63.7-0.30.22.90.4-0.42.00.51.90.00.2-10.87.72.02.02.53.52.21.60.00.8-0.6-0.2-4.43.21.20.43.12.21.31.4-0.30.20.80.3-5.22.41.01.02.63.01.21.50.60.50.51.9-6.72.84.81.72.74.51.93.8-0.21.31.20.8-3.76.62.81.65.32.92.15.91.71.21.81.5-2.53.60.42.93.54.03.32.3-1.01.0-1.3-0.6-0.41.40.61.21.41.31.31.20.30.70.20.3-3.24.21.11.33.02.71.43.43.11.42.83.7-2.14.01.92.73.83.22.84.50.41.91.82.8-4.23.2-0.32.42.53.82.81.10.61.10.50.8-1.42.00.70.72.61.51.42.70.21.00.30.4-7.08.91.81.16.54.22.13.5-0.10.53.03.4-3.45.01.91.94.33.42.43.02.92.24.84.8-2.14.43.32.74.55.14.46.72.54.54.44.1-2.016.21.72.85.84.44.62.90.20.90.31.4-1.73.50.10.53.51.80.81.60.50.90.60.8-3.34.61.21.53.32.91.61.5-0.10.80.50.6-8.88.32.40.66.93.90.71.10.20.7-1.2-1.1-4.01.71.61.51.81.70.52.01.40.61.21.02.52.4-0.41.22.71.41.2Labour productivity (real GDP per occupied person) (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesNote : See note 6 on concepts and sources where countries using full time equivalents are listed.PolandRomaniaSwedenEUUnited KingdomJapanTable 29:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220230.92.60.61.41.54.4-0.25.04.4-1.42.91.2-0.42.31.73.23.24.30.52.62.10.4-0.31.67.93.44.35.25.55.5-0.66.73.0-3.91.41.74.1-1.4-3.9-3.01.4-4.7-5.21.34.0-6.31.63.73.12.8-2.3-1.0-0.37.8-5.91.20.3-5.6-3.3-1.03.20.4-0.21.73.15.00.82.11.2-0.4-0.5-0.41.62.00.70.8-0.74.3-0.21.81.9-0.70.00.42.82.40.31.81.41.3-0.12.41.30.31.20.83.62.8-2.61.12.91.40.42.72.8-1.60.81.213.40.24.95.45.17.03.54.23.53.40.42.9Lithuania5.60.64.35.26.35.77.37.13.74.73.42.11.94.31.94.52.14.11.45.13.4-1.42.22.41.82.71.43.93.611.4-2.11.81.00.4-1.6-0.31.02.40.32.33.08.3-1.01.93.2-0.80.31.51.02.51.82.12.57.31.00.51.6-0.5-0.71.81.8-0.20.63.42.89.31.0-0.60.8-0.5-1.41.12.72.90.62.74.27.4-1.10.83.9-1.8-1.61.62.22.11.94.25.26.32.27.43.91.51.82.00.83.9-0.32.61.90.83.02.71.70.51.21.51.52.00.72.01.94.40.02.32.1-0.40.21.04.16.55.86.73.19.55.47.74.85.75.64.91.72.11.46.14.37.72.42.82.83.42.92.02.32.00.51.11.23.81.12.82.2-0.90.71.32.61.9-2.03.60.09.8-3.11.11.5-4.2-0.90.24.82.62.03.33.46.64.06.74.53.25.84.0-0.32.81.03.22.47.90.66.05.12.53.02.210.65.23.88.26.64.7-9.06.44.10.92.95.11.02.81.43.51.54.30.82.63.2-1.20.61.71.52.10.82.22.04.60.02.52.2-0.30.41.23.71.61.42.13.612.1-2.72.02.4-3.8-0.91.2-1.4-1.30.02.62.03.4-1.4-0.7-0.6-0.4-0.30.92.11.01.61.91.94.13.25.92.70.42.32.3Unit labour costs, whole economy ¹ (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited States¹ Compensation of employees per head divided by labour productivity per head, defined as GDP in volume divided by total employment.Note: See note 6 on concepts and sources where countries using full time equivalents are listed.PolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

165 

Table 30:29.04.20225-year  2003 - 072008 - 122013 - 17201820192020202120222023202120222023-1.10.9-0.9-0.1-0.33.1-4.50.41.4-3.30.6-0.4-1.41.10.01.21.22.7-2.4-2.6-1.4-2.2-2.7-0.20.8-0.11.51.22.25.8-5.7-1.3-0.1-6.6-1.6-0.81.6-0.5-5.8-3.7-2.8-3.5-4.8-3.3-0.1-6.1-0.42.20.01.3-1.4-0.8-0.58.7-7.9-3.4-1.7-5.6-4.2-1.4-0.6-0.1-0.70.51.73.8-1.4-1.5-1.1-1.9-2.0-1.3-0.40.90.0-0.2-2.01.8-1.0-0.4-1.1-1.5-1.3-1.00.30.8-0.60.80.50.0-0.6-0.6-1.1-0.8-0.2-0.60.10.7-2.10.11.82.5-2.3-1.8-0.3-3.9-0.80.22.1-1.83.31.52.57.2-3.1-2.8-1.5-0.1-2.40.8Lithuania0.8-2.72.71.63.64.20.7-0.30.70.40.80.1-1.70.50.32.71.5-0.2-5.11.11.3-3.60.00.2-0.30.4-1.21.61.29.8-3.8-1.0-1.6-1.3-3.4-1.8-1.01.4-0.5-0.1-0.15.8-3.4-1.80.0-3.1-1.30.0-1.00.80.00.30.84.8-0.7-2.8-1.5-2.3-2.9-0.3-1.3-0.8-1.01.51.17.20.3-3.3-2.2-1.6-3.1-0.3-0.71.2-0.50.61.96.1-3.6-2.40.2-3.3-3.4-0.1-1.31.01.72.12.63.8-0.20.8-1.50.1-2.8-0.2-0.31.7-1.60.60.4-0.70.3-1.1-0.5-1.4-0.8-0.8-0.70.9-0.40.40.12.3-2.1-1.6-1.0-2.0-1.6-0.5-2.12.53.22.4-2.05.1-0.8-1.70.91.80.91.3-0.21.2-0.13.50.43.2-1.6-4.3-1.8-0.5-0.1-0.40.1-0.2-0.30.40.41.1-1.2-0.5-0.1-1.8-0.9-0.2-1.2-0.6-2.41.5-1.910.0-6.1-2.6-0.9-6.4-2.9-1.60.3-0.6-0.9-1.4-1.30.3-2.71.0-0.1-1.41.20.3-2.9-0.20.21.9-0.73.5-4.9-3.7-2.5-2.1-2.2-0.5-4.1-0.80.71.9-0.20.8-13.7-2.8-0.8-2.9-1.40.9-0.51.0-0.31.1-1.02.5-2.1-1.6-0.7-3.2-0.70.1-1.10.7-0.50.4-0.12.4-2.7-1.8-1.1-2.2-1.6-0.50.8-0.4-0.20.11.56.7-3.0-1.7-0.2-4.5-1.2-0.5-0.3-0.1-0.82.61.32.4-0.5-1.2-2.10.1-0.60.6-0.6-0.50.1-0.40.12.9-1.0-0.5-0.1-3.1-0.30.2Real unit labour costs ¹ (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited States¹ Nominal unit labour costs divided by GDP price deflator.Note: See note 6 on concepts and sources where countries using full time equivalents are listed.PolandRomaniaSwedenEUUnited KingdomJapanTable 31:29.04.20225-year  2003 - 072008 - 122013 - 17201820192020202120222023202120222023::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::Lithuania::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::1.95391.95581.95581.95581.95581.95581.95581.95581.95581.95581.95581.955829.913925.279326.829625.647025.670526.455125.646224.476224.418425.651225.395925.39597.44647.44887.45117.45327.46617.45427.43707.43987.43967.43777.44027.44027.42577.36277.56477.41827.41807.53847.52887.55697.56157.52747.51287.5128253.7460274.9693307.2067318.8897325.2967351.2494358.5622372.0402374.4420357.3237359.5550359.55504.12544.02764.23724.26154.29764.44304.56554.85784.94874.55654.58184.58183.65734.16634.47354.65404.74534.83834.92124.94554.94524.92104.94834.94839.20709.49929.241010.258310.589110.484810.147010.355810.315110.139710.097710.0977:::::::::::::0.68410.84480.81550.88470.87780.88970.85970.83520.83480.85980.84800.8480141.6677121.8282130.1375130.3959122.0058121.8458129.8649135.6138137.3780129.9894130.5430130.54301.24901.37361.20051.18101.11951.14221.18281.09051.07971.18651.15771.1577Nominal bilateral exchange rates against ecu/euro (2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceCyprusLatviaLuxembourgItalyHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

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Table 32:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220231.4-0.20.51.9-0.61.20.7-0.4-0.10.6-0.30.01.8-0.50.62.5-1.11.61.2-0.6-0.11.1-0.50.01.1-0.30.82.2-0.21.30.40.0-0.10.1-0.30.02.5-0.30.02.5-2.11.41.3-2.8-0.31.1-1.00.01.30.21.43.80.02.52.42.10.02.10.10.01.3-0.10.62.2-0.61.40.9-0.1-0.10.9-0.30.01.7-0.40.62.3-1.01.41.1-0.6-0.11.0-0.40.01.7-0.40.62.6-0.91.51.3-0.4-0.11.2-0.40.01.20.00.52.8-1.01.91.20.1-0.10.8-0.40.0-2.80.10.72.00.01.50.60.80.00.5-0.20.0Lithuania1.30.00.72.1-0.21.60.80.70.00.7-0.20.00.80.00.51.3-0.31.00.5-0.10.00.4-0.20.01.7-0.80.32.1-1.41.21.30.10.01.2-0.30.01.1-0.10.51.7-0.51.20.6-0.3-0.10.5-0.30.01.0-0.30.41.7-0.61.20.8-0.40.00.7-0.30.01.1-0.10.41.5-0.51.10.6-0.3-0.10.5-0.30.0-0.60.10.51.3-0.11.20.80.40.00.6-0.10.05.32.60.51.2-0.21.30.50.10.10.5-0.20.01.7-0.60.92.5-0.61.40.7-0.3-0.10.6-0.40.01.6-0.30.62.3-0.91.51.0-0.5-0.10.9-0.40.01.20.61.33.90.52.62.42.70.02.20.30.02.72.2-0.44.1-0.2-1.93.95.30.33.80.90.01.4-0.50.92.2-0.71.80.7-0.8-0.20.4-0.60.01.0-0.60.82.5-0.1-0.31.20.40.01.10.10.00.0-2.6-0.8-1.6-2.1-6.3-1.3-3.3-0.6-1.1-0.70.01.3-1.60.31.4-1.0-2.2-2.4-6.2-1.9-2.2-0.80.00.1-5.30.40.2-1.9-0.2-0.50.80.0-0.7-0.60.01.70.9-1.2-4.2-3.72.93.7-3.00.33.7-0.20.01.6-0.40.52.0-1.01.21.0-0.7-0.41.0-0.40.00.3-4.1-1.12.0-0.50.15.21.9-0.15.10.90.0-2.68.5-3.80.64.72.0-5.5-7.8-1.8-5.4-1.50.0-4.7-0.45.3-1.13.31.3-3.66.30.7-3.91.90.0Nominal effective exchange rates to rest of a group ¹ of industrialised countries (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited States¹ 42 countries: EU-27, TR, CH, NO, US, UK, CA, JP, AU, MX, NZ, KO, CN, HK, RU and BR.PolandRomaniaSwedenEUUnited KingdomJapanTable 33:29.04.20225-year  2003 - 072008 - 122013 - 1720182019202020212022202320212022202349.954.254.152.351.959.254.854.053.456.754.253.846.146.144.444.345.050.851.548.846.952.347.446.034.040.438.939.439.445.942.343.642.743.542.642.133.548.632.325.324.227.324.923.021.225.022.921.446.453.953.248.547.959.956.953.547.657.950.848.338.745.943.941.842.351.850.648.447.050.947.244.953.056.156.955.655.461.459.257.055.860.156.454.747.249.750.048.448.557.055.554.053.056.252.751.038.941.341.442.738.445.144.141.040.044.940.940.034.942.138.539.438.243.344.944.039.447.643.040.6Lithuania34.340.834.634.034.842.938.741.539.341.140.939.141.441.240.742.142.947.242.342.742.344.644.144.142.541.538.135.836.146.345.543.942.847.242.441.343.146.544.642.242.047.646.345.244.648.245.043.751.251.850.948.748.657.055.951.950.355.050.850.045.649.348.043.242.549.348.146.145.149.146.645.645.849.050.043.543.351.349.147.346.350.948.747.338.641.342.839.840.745.346.844.243.347.643.944.648.453.056.053.353.357.154.953.953.456.954.352.946.749.648.546.946.953.652.450.348.853.249.447.936.936.138.337.036.342.043.143.943.142.241.841.443.143.341.240.641.147.346.444.543.747.344.543.951.555.653.750.549.553.451.048.347.152.248.647.347.348.147.445.546.154.549.248.648.551.249.749.549.749.248.846.146.051.247.947.346.448.548.146.444.144.541.941.541.848.244.243.943.045.142.942.535.038.935.034.836.242.039.941.139.641.340.539.951.850.750.149.849.152.650.249.147.251.049.448.846.849.348.246.546.553.051.649.648.252.448.847.440.546.242.140.540.651.747.843.642.147.042.141.234.739.239.238.338.746.044.243.140.643.541.841.037.041.638.337.938.247.845.038.137.044.241.440.3Total expenditure, general government (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

167 

Table 34:29.04.20225-year  2003 - 072008 - 122013 - 1720182019202020212022202320212022202349.050.451.851.449.950.249.349.049.049.049.148.843.844.445.246.246.546.547.846.345.945.845.045.536.239.738.938.939.640.340.039.339.140.440.139.934.833.629.725.524.722.223.022.421.621.821.221.139.342.748.849.549.049.849.449.246.648.046.847.139.636.538.639.239.341.543.743.642.642.842.040.749.850.753.253.452.352.552.852.452.751.951.151.244.046.047.446.246.947.448.348.548.746.847.046.837.037.238.739.139.739.342.440.739.940.039.539.234.136.437.538.537.638.837.636.736.438.138.738.6Lithuania33.534.634.034.535.235.737.737.037.037.137.838.042.442.042.145.145.243.743.242.642.444.444.344.438.438.438.037.936.736.937.538.338.236.036.736.642.042.743.443.743.743.943.842.542.642.942.942.748.648.649.348.949.249.050.048.848.949.148.548.740.641.543.742.942.643.545.344.244.144.643.242.944.444.345.044.243.843.543.943.042.943.743.542.935.935.940.438.839.439.940.740.540.740.339.641.351.752.253.952.552.351.652.451.751.753.151.951.844.545.146.546.446.346.547.346.646.346.145.545.538.134.237.138.738.438.139.040.240.738.639.039.340.139.740.841.541.441.640.540.239.840.440.240.154.854.053.851.353.653.353.349.247.751.349.948.643.742.444.445.546.347.246.446.446.747.246.847.442.545.146.544.043.943.441.141.341.441.042.442.640.139.039.141.341.041.342.339.938.641.841.140.433.332.833.232.031.932.732.833.633.333.233.533.553.050.650.050.749.749.950.048.747.750.149.849.744.845.046.346.146.046.246.946.045.745.845.245.137.638.237.938.338.238.739.539.739.836.936.636.730.331.134.535.835.737.136.636.636.434.436.837.132.231.033.231.831.832.533.332.432.232.733.533.5Total revenue, general government (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 35:29.04.20225-year  2003 - 072008 - 122013 - 17201820192020202120222023202120222023-0.9-3.9-2.3-0.9-2.0-9.0-5.5-5.0-4.4-7.8-5.1-4.9-2.4-1.70.81.91.5-4.3-3.7-2.5-1.0-6.5-2.5-0.52.2-0.80.0-0.60.1-5.6-2.4-4.4-3.7-3.1-2.5-2.21.3-15.0-2.60.10.5-5.1-1.9-0.50.4-3.2-1.7-0.3-7.1-11.2-4.40.91.1-10.2-7.4-4.3-1.0-9.9-3.9-1.11.0-9.3-5.3-2.6-3.1-10.3-6.9-4.9-4.4-8.1-5.2-4.2-3.2-5.5-3.6-2.3-3.1-8.9-6.5-4.6-3.2-8.1-5.3-3.5-3.1-3.7-2.6-2.2-1.5-9.6-7.2-5.5-4.3-9.4-5.8-4.3-1.9-4.1-2.6-3.61.3-5.8-1.7-0.3-0.2-4.9-1.4-0.9-0.9-5.6-1.0-0.8-0.6-4.5-7.3-7.2-3.0-9.5-4.2-2.0Lithuania-0.8-6.2-0.60.50.5-7.3-1.0-4.6-2.3-4.1-3.1-1.11.00.81.43.02.3-3.40.9-0.10.1-0.20.20.3-4.1-3.20.02.10.6-9.5-8.0-5.6-4.6-11.1-5.8-4.7-1.1-3.8-1.21.41.7-3.7-2.5-2.7-2.1-5.3-2.1-1.0-2.6-3.2-1.60.20.6-8.0-5.9-3.1-1.5-5.9-2.3-1.3-5.0-7.8-4.4-0.30.1-5.8-2.8-1.9-1.0-4.5-3.4-2.8-1.4-4.7-5.00.70.4-7.8-5.2-4.3-3.4-7.2-5.2-4.4-2.8-5.4-2.4-1.0-1.3-5.5-6.2-3.6-2.6-7.3-4.2-3.23.3-0.8-2.1-0.9-0.9-5.5-2.6-2.2-1.7-3.8-2.4-1.1-2.1-4.5-2.0-0.4-0.7-7.1-5.1-3.7-2.5-7.1-3.9-2.41.2-1.8-1.21.72.1-4.0-4.1-3.7-2.4-3.6-2.8-2.1-3.0-3.6-0.40.90.3-5.8-5.9-4.3-3.9-7.0-4.3-3.93.4-1.60.10.84.1-0.22.30.90.6-0.91.31.4-3.7-5.7-2.90.00.2-7.3-2.9-2.3-1.8-4.1-2.9-2.1-7.2-4.1-2.3-2.1-2.1-7.8-6.8-6.0-4.9-7.5-5.7-3.8-4.1-5.4-2.9-0.2-0.7-6.9-1.9-4.0-4.4-3.3-1.8-2.1-1.6-6.1-1.8-2.8-4.3-9.3-7.1-7.5-6.3-8.0-6.9-6.31.3-0.1-0.10.80.6-2.7-0.2-0.50.5-0.90.30.9-2.0-4.4-1.9-0.4-0.6-6.8-4.7-3.6-2.5-6.6-3.6-2.3-2.9-8.1-4.2-2.2-2.4-13.1-8.3-3.9-2.3-10.1-5.5-4.5-4.7-8.0-4.7-2.5-3.0-9.0-7.6-6.5-4.1-9.1-5.0-3.9-4.8-10.6-5.1-6.1-6.4-15.3-11.7-5.7-4.9-11.4-7.9-6.8Net lending (+) or net borrowing (-), general government (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

168 

Table 36:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220234.63.72.92.12.01.91.71.41.41.71.41.32.82.51.40.90.80.60.60.50.50.50.50.40.20.10.10.00.00.00.00.00.20.00.10.11.12.73.01.61.31.00.80.80.70.80.70.74.75.83.63.43.03.02.52.42.32.62.52.41.82.13.12.42.32.22.22.12.02.22.12.02.72.72.01.71.41.31.41.41.51.21.11.04.64.74.23.63.43.53.53.53.23.42.92.83.02.52.92.42.22.11.81.61.31.91.61.30.61.51.20.70.70.70.50.60.60.70.60.6Lithuania0.91.51.50.90.90.70.40.30.30.40.30.30.20.40.40.40.30.20.20.10.10.10.10.13.63.12.31.51.31.31.21.11.11.11.11.12.21.91.30.90.80.70.60.40.40.50.40.33.12.92.31.61.41.31.11.01.01.10.90.92.73.64.43.43.02.92.42.22.22.62.32.21.51.62.92.01.71.61.31.21.11.41.31.21.91.51.81.41.21.21.11.11.01.21.11.11.61.41.20.90.80.70.50.50.50.50.40.33.02.92.41.81.61.51.51.41.31.41.21.21.60.80.80.70.60.50.50.50.50.60.60.61.11.21.10.70.70.80.70.90.90.70.70.72.11.81.40.80.70.50.50.60.50.70.50.61.72.43.12.32.22.01.61.41.31.71.51.44.14.33.52.32.22.32.32.73.02.32.32.32.52.51.91.41.41.31.11.51.81.11.01.01.21.41.61.01.11.41.41.51.61.71.81.91.81.30.60.50.40.30.20.10.20.10.10.22.92.82.21.71.51.41.41.31.31.31.21.12.22.72.72.62.32.02.73.03.01.81.71.72.01.91.81.51.51.51.51.41.31.51.41.44.04.23.94.04.13.93.53.23.13.33.23.1Interest expenditure, general government (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 37:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220233.7-0.20.61.30.0-7.1-3.9-3.5-3.1-6.1-3.7-3.60.40.82.22.82.3-3.7-3.1-2.0-0.5-5.9-2.0-0.12.4-0.60.1-0.50.1-5.6-2.3-4.3-3.5-3.1-2.5-2.12.3-12.30.41.81.8-4.1-1.10.31.1-2.4-1.00.4-2.4-5.4-0.84.34.2-7.2-5.0-1.91.3-7.3-1.41.32.8-7.2-2.2-0.2-0.8-8.0-4.7-2.8-2.4-5.9-3.1-2.1-0.5-2.8-1.6-0.6-1.6-7.6-5.1-3.2-1.7-6.9-4.2-2.51.51.01.61.51.8-6.1-3.7-2.0-1.1-5.9-2.9-1.41.1-1.70.3-1.33.5-3.60.21.31.1-3.00.20.4-0.3-4.10.2-0.10.1-3.8-6.8-6.7-2.4-8.9-3.6-1.4Lithuania0.0-4.70.91.41.3-6.6-0.6-4.2-2.0-3.7-2.9-0.91.21.21.83.32.6-3.21.00.00.20.00.30.4-0.50.02.33.61.9-8.2-6.8-4.4-3.5-10.0-4.7-3.61.1-1.90.12.32.5-3.0-2.0-2.3-1.7-4.8-1.7-0.70.5-0.30.71.82.0-6.7-4.8-2.1-0.5-4.7-1.4-0.4-2.3-4.10.13.03.1-2.9-0.40.31.2-1.9-1.1-0.50.1-3.1-2.12.82.1-6.2-3.9-3.2-2.3-5.8-3.9-3.2-0.9-3.9-0.70.3-0.1-4.3-5.0-2.6-1.5-6.1-3.1-2.14.90.6-0.90.0-0.1-4.8-2.1-1.7-1.2-3.3-2.0-0.80.8-1.60.41.41.0-5.6-3.6-2.3-1.1-5.7-2.7-1.22.8-1.1-0.42.42.7-3.5-3.6-3.1-1.9-3.0-2.2-1.5-2.0-2.40.71.61.0-5.0-5.1-3.4-3.0-6.2-3.5-3.15.50.21.41.64.80.42.91.51.1-0.21.81.9-2.0-3.30.22.32.4-5.3-1.3-0.9-0.5-2.4-1.4-0.7-3.10.21.20.20.1-5.5-4.4-3.3-1.9-5.1-3.3-1.5-1.5-2.9-1.01.20.6-5.6-0.8-2.5-2.6-2.2-0.8-1.1-0.5-4.6-0.2-1.8-3.2-8.0-5.7-6.0-4.7-6.4-5.1-4.43.11.20.51.31.0-2.40.0-0.30.7-0.80.51.10.9-1.60.31.31.0-5.3-3.3-2.2-1.2-5.3-2.4-1.1-0.8-5.3-1.50.3-0.2-11.0-5.6-0.80.7-8.3-3.8-2.8-2.7-6.1-2.9-0.9-1.6-7.5-6.2-5.1-2.8-7.6-3.6-2.6-0.8-6.4-1.2-2.2-2.3-11.4-8.2-2.5-1.8-8.1-4.7-3.6Primary balance, general government ¹ (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited States¹ Net lending/borrowing excluding interest expenditure.PolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

169 

Table 38:29.04.20225-year  2003 - 072008 - 122013 - 17201820192020202120222023202120222023-1.4-3.6-2.2-1.4-2.9-5.7-4.9-4.7-4.2-7.0-5.0-4.9-2.1-1.30.71.20.7-2.4-2.7-1.8-1.0-5.0-2.6-0.8-0.41.10.1-1.5-0.8-3.4-2.3-3.7-3.0-2.7-2.2-1.80.7-14.1-3.60.02.3-2.6-3.2-2.0-0.9-4.7-3.1-1.2-8.4-7.72.54.73.7-3.5-4.6-3.0-0.9-7.4-3.6-1.9-1.1-6.8-2.2-3.2-4.3-4.8-3.9-3.5-4.3-4.7-4.1-4.6-4.2-4.8-2.8-2.9-4.2-4.5-5.4-4.6-3.4-6.8-5.3-4.0-4.1-3.0-0.9-2.3-1.9-5.1-5.9-5.3-4.5-7.6-5.6-4.7-3.5-4.3-0.2-5.5-1.6-4.6-2.0-0.4-0.7-4.7-1.8-1.5-2.7-3.7-1.3-2.1-1.5-3.2-6.7-6.6-2.7-8.6-4.0-2.1Lithuania-2.3-4.5-0.9-0.8-1.0-7.0-0.9-4.0-1.5-4.0-2.8-0.60.61.51.83.22.2-1.60.90.10.40.60.50.7-4.0-2.6-1.0-0.2-1.7-6.1-7.4-5.2-4.3-9.1-5.0-4.4-0.6-3.0-0.30.70.9-1.3-2.1-3.2-2.5-4.5-2.4-1.5-2.5-2.9-1.2-0.8-0.6-4.8-4.4-3.0-1.6-4.2-2.5-1.7-4.7-7.2-3.5-1.6-1.8-2.5-1.1-2.1-1.5-2.7-3.4-3.1-3.1-4.1-3.2-0.6-1.2-6.3-6.1-5.5-4.5-7.6-6.2-5.5-3.1-5.3-2.0-2.0-2.4-4.5-5.7-3.3-2.6-6.5-4.3-3.62.9-0.2-1.0-1.1-1.1-3.7-2.0-1.7-1.4-2.8-2.0-1.1-2.7-3.7-1.0-1.0-1.4-3.7-4.0-3.4-2.6-5.7-3.9-2.80.9-2.1-1.01.51.4-2.9-3.8-3.5-2.7-3.1-2.8-2.5-4.1-3.6-0.1-0.1-0.9-4.1-4.9-3.4-3.5-5.7-3.8-3.81.8-0.21.31.14.32.23.51.91.70.42.32.2-4.9-5.6-2.1-1.2-1.3-4.4-3.0-2.6-2.2-3.5-3.4-2.7-8.4-2.6-2.3-3.8-4.0-6.1-6.7-5.8-4.4-6.8-5.7-3.6-3.7-6.0-2.4-1.5-2.3-5.7-1.6-3.7-4.0-2.7-1.8-2.4-2.9-5.9-1.5-3.5-5.0-7.8-6.3-6.5-5.4-7.1-6.4-6.10.70.80.20.60.4-0.40.50.01.20.20.61.3-2.6-3.6-1.0-0.9-1.3-3.6-3.6-3.2-2.5-5.2-3.5-2.6Cyclically-adjusted net lending (+) or net borrowing (-), general government¹ (as a percentage of potential GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaPolandRomaniaSwedenEU¹ Cyclically-adjusted variables for Croatia are based on provisional values for fiscal semi-elasticities and subject to further revisionsTable 39:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220233.20.10.70.7-0.9-3.7-3.2-3.2-2.9-5.3-3.6-3.60.71.22.12.11.5-1.7-2.1-1.2-0.4-4.5-2.1-0.4-0.21.30.1-1.5-0.8-3.4-2.3-3.6-2.8-2.6-2.1-1.81.7-11.3-0.51.63.6-1.6-2.4-1.2-0.2-4.0-2.4-0.5-3.8-1.96.18.16.7-0.5-2.2-0.71.4-4.9-1.00.50.8-4.60.9-0.8-2.0-2.6-1.8-1.5-2.3-2.5-2.0-2.5-1.5-2.1-0.8-1.2-2.8-3.2-4.0-3.2-1.9-5.6-4.2-3.00.51.73.31.41.4-1.6-2.4-1.8-1.3-4.2-2.8-1.9-0.5-1.92.7-3.10.7-2.5-0.11.10.6-2.8-0.2-0.2-2.1-2.3-0.1-1.4-0.9-2.5-6.2-6.0-2.1-7.9-3.4-1.6Lithuania-1.5-3.00.60.0-0.1-6.3-0.4-3.7-1.2-3.6-2.5-0.40.82.02.23.62.6-1.41.10.20.60.80.70.8-0.40.61.41.3-0.4-4.8-6.2-4.0-3.2-8.0-3.9-3.31.6-1.11.01.61.7-0.6-1.6-2.8-2.2-4.0-2.0-1.20.70.01.10.80.9-3.4-3.3-2.0-0.6-3.1-1.5-0.8-2.0-3.61.01.71.20.41.40.20.7-0.1-1.1-0.8-1.6-2.6-0.31.40.5-4.7-4.8-4.3-3.4-6.2-4.9-4.3-1.3-3.8-0.3-0.6-1.1-3.3-4.6-2.3-1.5-5.3-3.2-2.54.51.20.2-0.2-0.3-3.0-1.5-1.2-0.9-2.3-1.7-0.70.3-0.81.30.90.2-2.2-2.5-2.0-1.2-4.3-2.6-1.62.5-1.3-0.22.21.9-2.4-3.3-3.0-2.2-2.5-2.2-1.9-3.1-2.31.00.7-0.2-3.3-4.2-2.5-2.5-5.0-3.1-3.13.91.62.71.95.02.84.12.42.21.12.82.8-3.2-3.21.11.10.8-2.4-1.5-1.2-1.0-1.8-1.9-1.3-4.41.61.3-1.5-1.7-3.8-4.4-3.1-1.4-4.5-3.3-1.3-1.1-3.6-0.50.0-1.0-4.4-0.5-2.2-2.2-1.5-0.8-1.4-1.8-4.40.1-2.4-3.9-6.4-4.9-5.0-3.8-5.5-4.6-4.22.52.10.81.00.8-0.10.80.11.30.30.81.50.3-0.81.30.80.2-2.2-2.2-1.9-1.2-3.9-2.4-1.4Cyclically-adjusted primary balance, general government¹ (as a percentage of potential GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaPolandRomaniaSwedenEU¹ Cyclically-adjusted variables for Croatia are based on provisional values for fiscal semi-elasticities and subject to further revisions 
  
  
European Economic Forecast, Spring 2022 

170 

Table 40:29.04.20225-year  2003 - 072008 - 122013 - 17201820192020202120222023202120222023:::-1.9-3.0-5.8-4.6-4.5-4.2-6.9-4.9-4.9:::1.30.7-2.4-2.6-1.8-1.0-5.0-2.6-0.8:::-1.5-0.8-3.4-3.3-3.8-3.0-3.7-2.3-1.8:::0.02.3-2.6-3.2-2.0-0.9-4.7-3.1-1.2:::5.32.7-4.1-5.5-3.0-0.9-7.9-3.5-1.9:::-2.8-3.9-4.3-3.8-3.5-4.3-4.7-4.1-4.6:::-2.9-3.3-4.4-5.3-4.5-3.3-6.7-5.2-3.9:::-2.4-2.0-5.2-6.3-5.8-4.8-8.0-5.9-4.9:::2.4-0.3-4.6-2.1-0.4-0.7-4.8-1.8-1.5:::-2.1-1.5-3.3-6.9-6.6-2.7-8.6-4.0-2.1Lithuania:::-0.8-1.0-7.0-0.9-4.0-1.5-4.0-2.8-0.6:::3.22.2-1.60.90.10.40.60.50.7:::-0.3-1.7-6.2-7.4-5.2-4.3-9.1-5.0-4.3:::0.70.7-1.3-2.0-3.2-2.5-4.4-2.4-1.5:::-0.8-0.6-4.8-4.4-3.0-1.6-4.2-2.5-1.7:::-1.0-1.2-1.8-1.3-1.9-1.5-3.0-3.2-3.1:::-0.6-1.1-6.2-6.1-5.5-4.5-7.6-6.2-5.5:::-2.0-2.4-4.5-5.7-3.3-2.6-6.5-4.3-3.6:::-1.0-1.2-3.7-2.0-1.7-1.4-2.8-2.0-1.1:::-0.9-1.2-3.6-4.0-3.4-2.6-5.7-3.9-2.8:::1.51.4-2.9-3.8-3.5-2.7-3.1-2.8-2.5:::-0.1-0.9-4.1-4.9-3.1-3.5-5.7-3.8-3.8:::1.14.32.23.51.92.2-2.03.31.9:::-1.2-1.4-4.4-3.1-2.7-2.3-3.5-3.4-2.7:::-3.8-3.8-6.2-6.6-5.8-4.4-6.8-5.7-3.6:::-1.5-2.3-5.9-1.8-4.0-4.0-2.9-2.1-2.4:::-3.1-4.9-7.8-6.3-6.5-5.4-7.1-6.4-6.1:::0.60.4-0.40.50.01.20.20.61.3:::-0.8-1.2-3.6-3.6-3.3-2.5-5.3-3.5-2.6Structural budget balance, general government¹ (as a percentage of potential GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastCroatiaMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgFinlandEuro areaBulgariaCzechiaDenmarkNetherlandsAustriaPortugalSloveniaSlovakiaPolandRomaniaSwedenEUHungaryTable 41:29.04.20225-year  2003 - 072008 - 122013 - 1720182019202020212022202320212022202394.6100.4105.099.897.7112.8108.2107.5107.6112.7113.1114.665.576.271.861.258.968.769.366.464.571.469.268.14.86.910.08.28.619.018.120.923.518.420.421.426.384.188.663.157.258.456.050.345.555.652.351.1103.7144.2179.1186.4180.7206.3193.3185.7180.4202.9196.9192.142.161.998.7100.598.3120.0118.4115.1113.7120.6118.2116.965.483.196.097.897.4114.6112.9111.2109.1114.6113.7112.9105.6117.6134.4134.4134.1155.3150.8147.9146.8154.4151.4151.061.160.5103.298.491.1115.0103.693.988.8104.197.693.411.838.139.737.136.743.344.847.046.548.250.749.8Lithuania18.031.140.133.735.946.644.342.743.145.344.146.07.917.721.420.822.324.824.424.725.125.925.625.467.266.157.443.740.753.457.058.559.561.462.463.647.759.763.852.448.554.352.151.450.957.556.856.166.479.182.374.170.683.382.880.077.582.979.477.669.9101.4130.6121.5116.6135.2127.4119.9115.3128.1123.9122.725.838.977.170.365.679.874.774.172.777.776.476.036.340.252.949.648.159.763.161.758.361.860.059.139.544.660.859.859.669.065.865.966.671.271.271.068.883.392.987.885.799.297.494.792.7100.097.997.028.614.724.822.120.024.725.125.325.626.726.726.827.836.539.432.130.137.741.942.844.042.444.346.337.341.440.234.033.642.136.734.933.941.038.838.038.955.680.873.371.187.379.875.373.182.379.277.961.577.675.369.165.579.676.876.476.179.277.276.446.051.852.748.845.657.153.850.849.854.751.049.516.327.037.434.735.347.248.850.952.649.351.853.245.838.242.438.934.939.636.733.830.537.334.231.265.578.186.581.379.191.789.787.185.292.190.089.1Gross debt, general government (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastCroatiaMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgFinlandEuro areaBulgariaCzechiaDenmarkNetherlandsAustriaPortugalSloveniaSlovakiaPolandRomaniaSwedenEUHungary 
  
  
Statistical Annex 

171 

Table 42:29.04.20225-year  2003 - 072008 - 122013 - 1720182019202020212022202320212022202327.925.224.824.525.025.126.824.925.325.925.124.925.026.528.130.029.828.229.928.628.929.429.529.924.325.027.528.829.028.230.328.429.829.129.429.925.215.828.634.035.437.437.736.837.339.638.539.114.27.010.49.610.27.19.611.313.59.713.015.022.318.820.822.423.021.522.524.024.621.322.323.423.021.821.923.223.721.222.922.523.023.123.324.420.617.819.221.121.521.422.521.922.922.622.423.56.814.512.615.414.68.89.69.711.311.013.214.821.224.422.723.122.624.826.724.926.123.923.723.6Lithuania16.116.820.220.621.020.820.615.715.219.818.318.628.521.421.320.116.021.625.724.023.423.723.423.318.916.024.831.928.923.327.325.125.523.625.325.827.327.628.931.831.428.730.630.130.430.030.430.426.526.326.126.827.827.727.227.027.227.026.726.514.412.116.318.518.617.518.618.419.618.118.819.326.822.223.827.426.827.626.524.626.227.227.227.922.421.422.922.821.518.519.018.720.118.420.722.328.724.021.323.423.825.225.925.425.925.325.526.223.322.123.725.525.824.626.025.426.025.725.926.614.419.722.722.222.919.918.517.317.618.919.621.626.323.625.526.626.728.427.827.027.227.326.627.526.025.129.029.930.831.131.631.331.530.631.031.120.418.421.825.025.623.023.422.722.823.724.725.516.620.025.026.827.626.227.725.326.527.726.626.916.517.319.319.820.620.321.920.920.921.221.722.116.222.223.418.318.418.618.920.221.219.521.122.929.429.027.628.630.330.831.130.631.730.631.231.723.322.223.925.425.724.826.025.426.025.725.926.615.412.912.714.115.214.115.112.312.113.714.113.729.626.227.529.129.328.428.627.928.029.129.029.017.915.719.519.619.419.217.818.418.617.517.717.8Gross national saving (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 43:29.04.20225-year  2003 - 072008 - 122013 - 1720182019202020212022202320212022202325.625.524.222.724.331.129.426.926.930.326.926.624.324.724.424.925.128.929.627.226.032.128.427.017.321.122.724.624.628.127.426.427.226.826.226.520.621.528.931.532.540.037.534.934.440.137.436.316.814.39.86.06.711.412.712.410.715.213.612.716.722.723.822.823.828.826.026.026.326.525.225.421.622.221.021.422.525.425.022.622.026.323.523.319.717.818.720.219.826.024.123.023.026.223.423.45.514.410.49.99.411.59.17.49.012.811.612.517.625.220.219.219.523.928.027.125.628.823.222.2Lithuania13.219.118.117.218.023.718.616.914.620.217.916.521.915.615.512.38.819.119.618.918.118.417.917.719.717.022.526.725.029.131.627.527.130.426.926.624.627.026.827.226.629.029.828.828.031.929.028.024.525.123.623.123.531.629.125.424.328.924.723.615.816.117.316.316.019.318.817.017.419.718.418.523.421.922.623.022.731.327.323.824.229.727.327.221.223.221.920.519.620.422.318.919.422.722.222.821.921.019.420.220.526.024.223.023.124.123.423.221.622.322.422.723.127.627.025.224.628.725.925.28.918.120.317.217.120.019.717.416.019.418.919.822.122.022.221.722.129.029.127.127.229.126.527.020.022.824.625.223.627.125.726.826.927.726.026.016.117.620.120.220.024.121.820.319.922.021.922.318.520.722.522.623.424.426.923.323.627.824.923.916.817.818.416.117.722.719.620.020.819.819.320.112.522.521.718.119.223.622.422.722.423.023.123.524.124.823.423.024.928.426.626.326.526.626.026.021.422.222.322.422.927.326.625.024.528.125.525.015.516.913.812.914.022.119.312.110.418.714.513.130.229.728.427.828.132.631.529.727.733.729.628.518.821.921.622.522.530.925.920.920.325.622.421.3Gross saving, private sector (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

172 

Table 44:29.04.20225-year  2003 - 072008 - 122013 - 1720182019202020212022202320212022202316.816.312.711.612.420.216.112.412.617.112.712.216.917.217.418.718.423.322.618.215.823.419.318.8-2.19.29.912.312.716.411.99.010.08.98.38.28.712.89.310.610.225.221.614.612.418.514.613.9::::::::::::8.39.06.95.68.315.011.49.78.811.78.36.114.115.313.814.114.721.019.116.415.318.615.214.814.511.710.710.110.017.414.811.610.415.211.410.16.15.4-0.23.35.78.05.32.13.37.16.88.11.86.72.86.88.917.015.813.910.720.914.814.7Lithuania3.14.01.10.13.512.27.32.92.69.07.66.3:::::::::::::::::::::::::10.314.116.416.317.724.023.419.318.322.418.717.715.815.212.813.113.919.715.611.610.714.712.212.09.99.37.36.87.212.610.97.77.29.07.88.015.812.411.813.713.722.615.99.29.418.714.414.16.77.57.610.39.810.98.86.76.212.29.510.17.58.67.27.28.512.79.27.17.09.77.97.013.113.012.312.513.119.417.314.513.018.114.513.7:::::::::::::11.712.211.812.213.121.020.815.213.920.116.816.86.07.19.311.29.511.610.610.19.411.49.29.2:::::::::::::10.310.612.215.114.815.517.514.714.417.914.614.16.23.63.31.62.98.84.43.94.05.74.33.9::::::::::::7.713.215.616.218.220.519.316.515.216.715.415.512.712.912.011.912.518.617.013.812.517.313.913.17.49.67.34.84.614.010.43.94.410.66.96.311.111.38.59.410.718.617.513.710.914.89.98.39.812.012.513.213.321.718.213.813.417.614.213.5Saving rate of households (2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 45:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220232.3-0.20.61.80.8-6.0-2.6-2.0-1.6-4.4-1.7-1.70.71.73.75.14.7-0.70.21.42.9-2.61.12.87.03.94.84.24.40.12.92.02.52.33.23.34.6-5.6-0.32.42.9-2.60.32.02.9-0.61.12.8-2.6-7.30.63.63.5-4.2-3.1-1.02.8-5.5-0.62.35.5-3.9-3.0-0.4-0.8-7.2-3.5-2.0-1.6-5.2-2.9-2.01.4-0.40.91.81.2-4.1-2.1-0.21.0-3.2-0.21.20.90.10.60.91.7-4.5-1.6-1.1-0.1-3.6-1.00.01.40.12.35.55.2-2.70.42.32.3-1.91.72.33.6-0.82.53.83.10.8-1.3-2.20.5-4.90.51.4Lithuania2.9-2.32.13.43.0-2.92.0-1.20.6-0.30.42.16.65.95.87.97.22.56.15.25.35.35.55.6-0.9-1.02.35.23.8-5.8-4.2-2.5-1.6-6.7-1.6-0.82.60.52.24.54.9-0.30.81.32.4-1.91.42.52.01.22.63.74.2-3.9-1.81.62.9-1.92.03.0-1.4-4.0-1.02.22.6-1.8-0.21.32.2-1.60.40.83.30.31.24.44.1-3.7-0.90.82.0-2.50.00.61.2-1.81.02.21.9-1.8-3.3-0.20.8-4.2-1.5-0.66.83.01.93.23.2-0.91.72.42.81.22.13.01.8-0.21.42.82.6-3.0-1.00.21.4-3.00.01.35.51.62.45.05.8-0.1-1.2-0.11.6-0.50.61.84.21.63.34.94.5-0.6-1.3-0.2-0.1-1.80.10.56.02.34.44.67.24.05.94.54.62.95.05.04.30.81.74.85.6-1.01.62.52.91.82.83.3-1.9-0.62.44.24.31.80.92.02.9-0.11.73.0-0.2-0.50.93.72.8-2.42.40.90.11.42.52.03.8-0.31.60.3-0.9-5.0-3.5-2.4-1.3-3.5-2.0-0.75.34.24.25.75.52.44.54.35.24.05.25.72.00.01.63.02.9-2.6-0.50.51.5-2.30.41.60.0-4.0-1.01.21.2-8.0-4.20.21.7-5.0-0.40.6-0.6-3.5-0.91.31.1-4.3-2.9-1.80.3-4.6-0.60.4-0.9-6.2-2.1-2.9-3.0-11.8-8.2-2.5-1.7-8.1-4.6-3.5Gross saving, general government (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
Statistical Annex 

173 

Table 46:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220234.90.84.20.62.0-5.59.63.33.99.93.72.78.22.23.72.31.1-9.39.92.44.27.87.95.413.85.42.73.96.5-5.019.83.04.911.37.64.55.01.813.511.510.49.516.66.04.915.25.95.17.2-1.94.69.14.9-21.521.911.69.516.215.09.24.41.04.81.72.5-20.114.713.64.612.110.47.13.41.23.24.51.6-15.89.38.37.58.48.77.54.5-0.92.92.11.6-13.413.34.94.312.87.55.12.21.46.97.37.5-5.114.01.74.66.27.46.812.34.54.04.52.1-2.26.21.34.16.64.93.8Lithuania10.37.35.16.89.90.415.9-2.13.111.85.34.47.21.64.63.65.81.39.73.83.110.43.93.05.87.47.0-0.57.0-5.68.25.54.75.26.44.15.62.04.54.32.0-4.86.63.93.56.95.22.96.21.22.95.13.4-10.812.76.33.88.49.05.45.51.56.14.14.1-18.613.112.34.111.19.54.011.00.66.26.24.5-8.713.24.96.011.97.66.118.14.15.05.10.8-7.310.22.97.411.76.55.96.6-1.62.31.56.7-7.54.72.14.38.16.64.75.91.44.33.62.7-9.111.05.14.79.77.35.213.22.96.71.74.0-12.19.94.54.210.08.05.416.24.25.33.71.5-6.95.11.23.58.44.55.94.61.03.43.45.0-7.07.85.44.57.96.64.46.3-1.76.83.76.8-22.733.38.45.522.115.09.014.42.16.25.05.4-6.110.34.95.910.99.58.810.85.07.86.95.20.011.85.53.911.66.96.212.87.011.45.35.4-9.412.54.55.29.67.15.87.00.83.14.26.0-4.67.54.13.16.44.73.66.41.64.53.83.0-8.410.75.04.69.77.25.35.01.02.92.83.4-13.0-1.35.31.20.57.31.010.0-0.64.33.8-1.5-11.811.73.63.412.65.23.27.34.12.32.8-0.1-13.64.65.75.46.17.73.8Exports of goods and services, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapanTable 47:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220235.01.34.31.41.6-5.99.13.64.19.54.53.17.32.34.43.92.9-8.69.34.15.18.68.15.816.12.02.85.73.80.920.6-0.64.311.15.34.06.0-0.513.13.341.7-7.4-3.76.25.0-4.55.85.08.2-7.84.08.13.1-7.616.17.95.38.16.95.27.8-5.24.23.91.2-15.213.98.34.811.99.26.64.91.24.13.12.3-11.98.06.76.08.27.45.14.4-2.93.43.4-0.7-12.114.26.14.213.78.55.94.6-0.16.94.38.3-2.59.22.53.74.95.14.917.7-2.23.36.43.0-2.513.53.24.05.85.54.1Lithuania14.52.15.66.06.1-4.418.7-0.93.615.16.45.36.52.94.93.26.91.610.44.33.111.04.43.27.06.35.60.28.0-2.27.66.04.35.95.83.95.81.14.74.73.2-5.55.14.14.36.46.23.35.71.33.25.32.0-9.414.54.63.89.98.15.74.5-2.66.75.04.9-12.112.98.64.110.96.24.111.4-1.65.57.14.7-9.617.44.35.715.58.96.714.81.65.54.82.1-8.211.23.47.611.37.46.37.50.52.25.72.4-6.65.32.93.77.36.64.46.30.14.73.84.7-9.08.85.14.88.27.25.118.8-1.15.35.85.2-5.412.25.04.58.05.95.014.22.95.15.81.5-6.911.51.23.613.44.65.47.30.53.55.13.0-4.18.25.04.68.46.74.47.3-4.36.27.56.5-12.314.78.18.015.111.910.312.90.16.57.08.2-4.08.73.84.67.710.38.611.52.87.37.43.0-1.115.95.73.814.87.96.526.01.310.98.68.6-5.214.65.05.310.36.36.16.61.24.33.82.1-5.69.44.51.87.34.13.26.90.34.84.24.6-8.29.35.04.78.67.15.24.90.53.83.12.9-15.83.85.82.31.28.92.24.91.12.73.81.0-7.25.22.32.78.44.82.46.30.83.54.11.2-8.914.08.72.714.37.83.5Imports of goods and services, volume (percentage change on preceding year, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastMaltaBelgiumGermanyEstoniaIrelandGreeceSpainFranceItalyCyprusLatviaLuxembourgHungaryNetherlandsAustriaPortugalSloveniaSlovakiaFinlandEuro areaBulgariaCzechiaDenmarkCroatiaUnited StatesPolandRomaniaSwedenEUUnited KingdomJapan 
  
  
European Economic Forecast, Spring 2022 

174 

Table 48:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220233.0-0.90.0-0.40.61.00.9-0.6-0.20.90.80.86.96.67.76.76.25.65.14.75.25.15.35.6-16.6-5.9-4.3-4.7-3.4-0.6-4.4-5.9-5.2-1.0-0.40.018.622.031.933.633.138.941.040.740.140.039.839.6-16.3-13.9-10.9-12.6-13.0-11.8-14.9-17.4-17.0-12.7-13.4-14.2-7.4-4.6-1.7-2.4-2.2-0.8-1.7-4.4-4.1-1.5-2.2-2.5-0.7-2.3-1.5-1.7-1.4-2.1-3.0-4.5-3.2-2.9-2.7-1.90.1-0.23.12.63.44.12.90.81.33.72.62.5-24.6-23.3-20.2-21.0-20.1-19.2-18.3-20.4-21.4-20.9-22.4-24.0-21.9-12.3-10.1-8.6-8.6-5.1-7.4-10.9-9.9-5.8-7.3-8.5Lithuania-12.4-6.5-4.2-6.3-4.8-0.8-5.2-7.8-8.3-4.1-5.1-6.2-6.81.23.73.53.34.14.32.93.14.43.73.5-17.5-19.6-16.7-11.8-11.9-10.5-16.6-18.9-19.5-11.7-11.8-11.78.28.39.69.37.48.18.16.05.88.67.97.70.3-0.40.30.31.00.80.1-1.4-1.10.2-0.2-0.2-10.9-9.9-5.8-7.8-7.8-6.4-7.4-9.9-9.1-7.5-7.8-8.1-3.5-2.13.02.82.75.00.8-0.7-0.32.81.71.2-3.30.93.01.1-0.50.1-1.2-3.1-3.5-0.5-0.5-0.48.33.70.70.11.01.31.20.60.81.82.02.21.31.13.32.92.93.42.81.41.93.02.82.90.50.52.82.42.63.02.41.41.93.02.82.9-21.9-12.5-4.6-4.8-4.7-3.2-5.1-5.7-5.9-3.4-3.4-2.8-1.21.64.73.74.15.01.2-0.3-0.32.51.42.13.13.94.73.65.35.33.82.62.94.54.44.4-21.3-16.0-15.8-18.3-18.8-17.3-17.7-20.7-22.5-18.8-20.9-23.1-3.41.52.4-1.7-2.5-0.9-2.5-5.5-4.3-0.7-2.2-2.2-3.6-3.8-0.3-1.20.32.4-0.1-2.4-2.11.30.70.8-15.1-8.9-5.3-7.5-8.0-8.7-9.6-10.4-10.8-9.8-10.0-9.86.74.72.82.53.94.74.54.24.93.93.33.21.10.93.02.42.63.12.30.91.42.62.32.50.30.22.31.82.02.51.70.91.42.62.32.5-5.2-6.1-6.8-6.5-6.1-6.0-6.7-8.6-8.8-6.1-6.5-6.72.40.6-0.40.20.00.60.3-0.5-0.40.40.40.4-5.7-4.7-4.3-4.3-4.1-4.3-4.8-5.3-5.0-4.9-5.0-5.0BelgiumGermanyEstoniaIrelandGreeceMerchandise trade balance¹ (fob-fob, as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastSpainFranceItalyCyprusLatviaLuxembourgMaltaHungaryPolandRomaniaNetherlandsAustriaPortugalSloveniaSlovakia² See note 8 on concepts and sources.SwedenEUFinlandEuro areaEuro area, adjusted²BulgariaCzechiaDenmarkCroatiaEU, adjusted²United KingdomJapanUnited States¹ See note 7 on concepts and sources.Table 49:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220234.71.41.2-0.80.10.80.6-1.1-0.60.80.30.04.76.27.98.17.67.17.26.16.56.76.86.9-12.7-1.01.30.82.5-0.3-0.71.32.3-1.10.20.5-3.0-3.40.74.9-19.9-2.714.312.813.115.414.414.6-11.4-10.4-1.8-3.5-2.4-7.9-8.3-8.4-6.4-6.3-4.0-2.8-7.0-3.92.31.92.10.81.01.82.10.30.81.00.4-0.8-0.8-0.7-0.7-2.6-2.4-3.0-2.0-2.4-2.2-1.0-1.0-2.21.92.53.23.72.51.21.63.52.72.7-15.8-7.7-3.0-3.9-5.7-10.1-7.2-8.8-7.2-9.1-7.3-5.7-14.7-1.9-0.4-0.2-0.72.9-0.5-3.9-3.21.1-0.2-1.1Lithuania-9.6-3.30.40.33.57.32.0-1.8-2.12.61.91.28.02.92.73.0-2.43.77.55.95.55.55.25.2-5.5-3.84.610.77.61.44.11.91.90.41.81.96.17.29.010.89.47.09.58.78.78.49.08.92.32.82.11.02.21.9-0.5-1.0-0.8-0.1-0.2-0.5-8.9-7.80.50.30.1-1.2-1.1-1.7-0.7-0.9-0.4-0.4-2.7-1.74.56.16.17.64.41.72.65.44.84.8-5.4-2.30.4-0.3-2.0-0.8-2.4-4.3-4.1-1.7-1.0-1.14.40.5-1.4-1.8-0.30.70.70.20.41.21.21.50.50.83.33.62.92.63.22.42.93.13.23.40.2-0.42.72.92.31.92.42.42.93.13.23.4-12.8-6.12.91.01.9-0.5-1.1-1.8-1.80.41.22.7-4.1-4.2-0.8-0.6-0.92.5-2.3-3.7-3.8-1.2-2.5-1.73.15.28.17.38.88.18.37.87.77.47.37.1-7.4-4.51.61.92.8-0.93.31.70.30.80.80.3-9.2-1.62.20.0-0.8-1.1-2.9-5.5-3.5-1.1-2.4-1.9-4.6-4.8-0.7-1.00.83.31.6-0.5-0.22.62.62.9-9.6-6.3-1.1-4.4-5.3-5.8-7.0-7.5-7.3-6.5-6.3-6.16.66.03.42.65.26.15.54.85.85.14.85.00.40.73.23.22.82.73.02.12.63.03.03.20.00.42.82.72.32.42.42.12.63.03.03.2-2.4-3.1-4.8-3.9-2.7-2.5-2.6-4.6-4.9-2.8-3.0-3.43.72.52.63.53.43.03.42.52.63.53.43.3-5.3-3.2-2.1-2.1-2.2-2.8-3.6-3.9-3.4-3.6-3.6-3.5BelgiumGermanyEstoniaIrelandGreeceCurrent-account balance¹ (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastSpainFranceItalyCyprusLatviaLuxembourgMaltaHungaryPolandRomaniaNetherlandsAustriaPortugalSloveniaSlovakia² See note 8 on concepts and sources.SwedenEUFinlandEuro areaEuro area, adjusted²BulgariaCzechiaDenmarkCroatiaEU, adjusted²United KingdomJapanUnited States¹ See note 7 on concepts and sources. 
  
  
Statistical Annex 

175 

Table 50:29.04.20225-year  2003 - 072008 - 122013 - 172018201920202021202220232021202220234.61.41.2-0.70.30.80.7-0.9-0.50.80.30.04.76.17.77.97.56.76.95.86.26.36.46.5-11.62.12.82.24.21.81.13.04.00.41.61.8-2.8-3.3-2.3-11.0-29.8-6.814.112.612.911.19.99.9-9.8-8.70.1-2.3-1.1-5.8-6.2-6.3-4.1-4.1-1.7-0.4-6.3-3.52.82.42.41.21.92.93.21.52.32.60.3-0.9-0.8-0.7-0.7-2.5-1.7-2.4-1.6-2.0-1.7-0.6-0.9-2.22.02.53.13.72.41.11.53.42.72.7-15.3-7.4-2.7-3.3-5.6-10.0-7.2-8.8-7.2-9.1-7.2-5.6-13.50.31.71.60.84.71.6-1.3-0.43.22.51.9Lithuania-8.50.02.71.85.29.13.6-0.3-0.74.23.52.87.11.51.81.8-3.32.86.75.24.84.74.44.5-3.7-2.56.011.68.92.85.12.92.91.42.82.96.26.68.710.89.36.99.58.88.78.48.98.92.22.71.90.42.21.8-0.6-1.1-0.9-0.2-0.3-0.6-7.4-6.41.71.21.0-0.20.70.31.60.31.01.2-2.9-1.14.55.75.87.14.01.32.15.04.44.4-5.3-1.11.2-0.3-2.0-0.8-1.9-3.5-2.2-1.5-0.21.54.50.6-1.3-1.8-0.20.80.80.30.51.31.31.60.70.93.33.22.62.53.32.63.13.13.23.50.3-0.32.72.42.01.82.62.63.13.13.23.5-12.6-4.94.92.03.31.1-0.40.70.52.43.75.0-4.0-2.70.80.2-0.43.7-1.1-1.9-1.80.0-0.40.43.25.28.07.38.88.18.47.97.97.47.27.0-7.3-4.32.43.24.51.35.76.24.84.35.34.8-8.80.34.82.21.10.6-0.3-3.4-0.80.60.20.7-4.2-3.40.80.12.14.52.91.01.34.04.14.6-8.9-5.41.3-3.2-3.8-4.2-5.4-5.9-5.7-4.9-4.7-4.46.45.93.32.65.26.15.65.05.95.24.85.10.50.83.33.02.62.73.32.42.93.13.23.50.20.52.92.42.22.42.72.42.93.13.23.5-2.5-3.1-4.9-4.0-2.7-2.6-2.7-4.8-5.0-2.9-3.1-3.53.72.42.53.53.42.93.42.52.63.43.30.0-5.4-3.2-2.2-2.2-2.3-2.8-3.6-3.9-3.5-3.6-3.60.0BelgiumGermanyEstoniaIrelandGreeceNet lending (+) or net borrowing (-) of the nation¹ (as a percentage of GDP, 2003-2023)Spring 2022Autumn 2021averagesforecastforecastSpainFranceItalyCyprusLatviaLuxembourgMaltaHungaryPolandRomaniaNetherlandsAustriaPortugalSloveniaSlovakia² See note 8 on concepts and sources.SwedenEUFinlandEuro areaEuro area, adjusted²BulgariaCzechiaDenmarkCroatiaEU, adjusted²United KingdomJapanUnited States¹ See note 7 on concepts and sources.Table 51:29.04.20222015201620172018201920202021202220232021202220235.82.43.1-3.80.63.82.8-5.8-3.54.11.40.1261.9272.1262.7271.6265.1238.3257.7233.1262.0238.2257.3270.90.40.30.50.20.7-0.1-0.20.40.8-0.30.10.211.6-11.41.516.0-70.8-9.960.359.866.565.465.870.4-2.6-3.9-3.7-6.3-4.4-13.0-15.1-16.7-13.3-11.1-7.5-5.521.835.432.222.626.29.311.523.528.54.010.614.1-10.9-13.5-16.3-16.1-17.1-59.2-59.9-78.1-53.5-59.3-56.5-27.423.544.044.344.757.862.144.822.831.961.451.153.0-0.1-0.8-1.0-0.9-1.3-2.2-1.7-2.2-1.9-2.1-1.8-1.5-0.10.40.3-0.1-0.20.8-0.2-1.4-1.20.4-0.1-0.4Lithuania-0.9-0.40.20.11.73.61.1-1.1-1.31.41.10.7-0.51.01.71.8-1.52.35.54.64.53.83.84.00.30.41.31.41.10.20.60.30.30.00.30.343.557.179.983.976.255.881.480.683.971.980.282.46.410.25.54.08.77.2-2.1-4.2-3.5-0.5-0.9-2.40.01.22.00.50.3-2.5-2.3-3.8-1.6-2.0-0.8-1.01.52.02.72.83.03.62.30.91.52.72.62.7-0.5-1.7-0.7-0.3-1.9-0.8-2.3-4.5-4.7-1.6-1.1-1.3-1.7-4.3-1.8-4.3-0.81.71.80.61.13.03.24.0359.2390.5414.5418.0343.4301.1386.0308.9396.4379.5408.9463.5282.5328.9356.0332.1273.9219.1291.6308.9396.4379.5408.9463.50.32.63.20.51.1-0.3-0.7-1.4-1.50.30.92.1-2.8-0.41.6-1.3-2.15.3-5.4-10.1-11.1-2.8-6.4-4.722.522.023.622.027.425.427.727.628.624.425.025.31.51.11.71.01.6-0.41.91.10.20.50.50.22.14.92.00.0-1.2-1.6-4.4-8.9-6.1-1.6-3.9-3.3-0.6-1.2-1.4-4.84.417.69.2-2.8-1.514.816.219.3-0.5-2.0-5.9-9.1-11.8-12.7-16.9-20.1-21.4-15.5-16.3-17.214.011.213.512.324.928.829.026.733.926.726.428.7395.6428.5452.7438.7387.7363.3426.4321.0417.5426.4451.2513.8347.5402.5383.4361.4322.2315.9350.4321.0417.5426.4451.2513.8-137.7-131.1-86.9-95.3-68.5-60.5-69.7-138.1-151.3-75.6-87.1-99.8123.0178.0179.8149.6157.5130.3141.8103.8108.6147.6146.0:-382.8-364.7-330.1-372.8-428.6-514.0-702.6-898.1-845.6-691.1-763.1:BelgiumGermanyEstoniaIrelandGreeceCurrent-account balance¹ (in billions of euro, 2015-2023)Spring 2022Autumn 2021forecastforecastSpainFranceItalyCyprusLatviaLuxembourgMaltaHungaryPolandRomaniaNetherlandsAustriaPortugalSloveniaSlovakia² See note 8 on concepts and sources.SwedenEUFinlandEuro areaEuro area, adjusted²BulgariaCzechiaDenmarkCroatiaEU, adjusted²United KingdomJapanUnited States¹ See note 7 on concepts and sources. 
  
  
European Economic Forecast, Spring 2022 

176 

Table 52:29.04.20222015201620172018201920202021202220232021202220236.32.55.34.02.9-9.09.15.24.58.37.04.64.62.95.94.31.9-8.110.44.74.39.36.74.72.83.36.44.52.7-7.49.92.54.18.56.34.54.32.35.34.01.3-8.510.25.44.19.46.74.33.62.66.23.91.8-9.110.24.84.58.66.74.95.12.95.33.72.4-9.69.45.24.48.46.84.64.42.95.43.92.0-8.99.85.14.38.86.74.63.92.85.63.91.9-9.010.14.84.58.96.84.7-4.70.69.23.92.6-9.612.1-4.64.68.26.04.41.93.06.94.53.4-7.512.10.54.19.36.34.5Lithuania1.62.96.64.53.4-8.411.01.14.28.76.44.65.13.35.23.82.4-8.39.65.04.68.96.74.810.97.14.13.411.1-8.86.15.54.65.56.54.75.33.85.33.83.4-8.79.34.84.48.46.84.74.93.75.64.22.5-8.310.14.34.79.27.25.24.92.25.33.92.6-10.49.75.74.59.07.25.05.14.06.34.72.9-8.511.34.24.910.07.65.84.93.96.24.72.8-7.910.63.84.49.67.15.43.32.86.04.12.1-7.910.13.44.28.66.44.54.73.05.64.02.3-8.69.94.84.48.96.84.74.24.16.94.32.6-7.810.93.64.79.06.85.35.03.95.94.32.8-8.310.33.94.89.17.45.34.22.65.44.01.9-8.59.35.24.28.56.54.56.54.55.94.44.3-8.510.34.84.69.07.35.15.14.16.24.62.8-8.310.84.04.79.57.15.24.53.45.84.23.0-8.99.93.34.58.87.05.04.83.25.94.02.4-8.610.34.34.69.37.25.25.73.65.14.03.7-8.08.65.04.48.26.64.54.83.15.64.02.4-8.69.94.74.48.96.84.75.12.65.13.93.1-8.69.55.64.48.86.54.52.32.26.85.0-0.7-7.212.05.54.610.06.34.83.31.75.54.31.5-9.29.64.94.58.16.14.5BelgiumExport markets (a) (percentage change on preceding year, 2015-2023)Spring 2022Autumn 2021forecastforecastNetherlandsGermanyEstoniaIrelandGreeceSpainFranceItalyLuxembourgMaltaCyprusLatviaPolandAustriaPortugalSloveniaSlovakiaFinlandEuro area (b)BulgariaCzechiaDenmarkCroatiaHungary(a)  Imports of goods and services to the various markets (incl. EU-markets) weighted according to their share in country's exports of goods and services.(b)  Intra- and extra-EU trade.RomaniaSwedenEU (b)United KingdomJapanUnited StatesTable 53:29.04.2022201520162017201820192020202120222023202120222023-2.43.60.2-3.2-0.93.90.5-1.8-0.61.5-3.0-1.80.8-0.4-0.9-1.9-0.8-1.2-0.4-2.4-0.1-1.31.10.7-4.21.4-1.5-0.63.62.78.90.50.72.51.20.034.22.23.97.38.520.36.20.30.55.8-0.90.61.2-3.02.15.03.1-14.210.26.44.96.77.44.0-0.72.40.2-1.90.1-11.74.98.70.33.43.62.50.2-1.1-1.00.6-0.4-7.6-0.43.03.0-0.41.92.80.3-0.9-0.2-1.7-0.3-5.02.90.1-0.23.60.70.314.26.41.83.34.85.01.76.60.0-1.91.42.31.00.9-0.50.0-1.25.9-5.30.90.0-2.5-1.4-0.6Lithuania0.82.06.52.26.49.64.4-3.2-1.02.9-1.1-0.20.21.9-5.2-0.23.310.40.2-1.2-1.41.4-2.6-1.74.2-0.14.5-3.8-3.83.41.80.10.1-0.3-0.1-0.52.1-2.11.20.5-1.34.3-2.3-0.9-0.9-1.3-1.5-1.8-1.8-0.7-0.70.90.9-2.62.51.8-0.9-0.61.70.21.32.22.90.21.4-8.93.06.1-0.51.82.0-1.0-0.42.14.51.31.6-0.11.60.61.11.70.00.31.71.1-2.40.4-2.00.7-0.3-0.92.92.1-0.70.5-2.71.12.7-2.54.50.4-4.9-1.30.1-0.40.20.21.90.00.0-0.40.3-0.41.00.30.30.80.40.52.24.4-1.1-2.41.4-4.5-1.00.9-0.50.81.10.11.00.51.2-0.6-1.31.6-4.7-2.6-1.2-0.7-2.70.6-0.61.4-0.5-0.63.01.8-1.10.00.2-0.40.1-0.13.62.41.0-0.72.3-14.319.73.20.911.36.63.52.1-0.30.30.42.62.2-0.51.11.21.22.33.43.35.73.62.62.19.81.72.1-0.62.6-0.11.2-0.312.71.81.22.5-0.71.90.00.60.4-0.20.50.1-1.1-0.90.22.23.6-1.1-0.7-1.3-1.7-1.7-0.91.80.40.1-0.20.60.20.80.30.20.80.30.5-1.30.70.5-1.00.2-4.7-9.8-0.3-3.0-7.60.7-3.40.9-0.6-0.1-1.2-0.7-4.9-0.2-1.8-1.12.4-1.0-1.5-3.0-1.3-1.4-1.4-1.6-4.5-4.30.70.9-1.81.5-0.7BelgiumExport performance (a) (percentage change on preceding year, 2015-2023)Spring 2022Autumn 2021forecastforecastNetherlandsGermanyEstoniaIrelandGreeceSpainFranceItalyLuxembourgMaltaCyprusLatviaPolandAustriaPortugalSloveniaSlovakiaFinlandEuro area (b)BulgariaCzechiaDenmarkCroatiaHungary(a)  Index for exports of goods and services divided by an index for growth of markets.(b)  Intra- and extra-EU trade.RomaniaSwedenEU (b)United KingdomJapanUnited States 
  
  
Statistical Annex 

177 

Table 54:29.04.2022( a )201720182019202020212022202320212022202314.92.82.11.8-5.95.42.72.35.04.32.512.02.61.81.6-6.45.42.72.35.04.32.40.51.61.82.1-5.76.22.01.86.02.61.90.12.82.74.0-4.44.22.13.13.84.13.50.35.23.23.0-5.83.31.92.73.04.43.20.32.82.02.1-2.14.72.61.84.32.72.43.32.71.11.1-4.62.91.62.42.74.61.70.05.84.14.1-3.08.31.02.49.03.73.50.48.99.04.95.913.55.44.414.65.14.10.21.11.71.8-9.08.33.53.17.15.23.61.43.02.32.1-10.85.14.03.44.65.54.42.32.31.91.8-7.97.03.11.86.53.82.30.13.42.93.5-8.110.23.43.08.15.63.41.91.70.90.5-9.06.62.41.96.24.32.30.05.95.75.3-5.05.52.33.55.44.23.50.03.34.02.5-3.84.52.02.94.75.04.00.14.34.04.6-0.15.01.72.65.03.63.40.11.32.03.3-1.86.92.22.75.83.72.70.24.35.44.6-4.57.13.62.67.45.43.20.011.16.05.9-8.39.44.24.05.06.24.80.82.92.42.0-3.85.03.31.64.03.31.60.42.32.51.5-6.74.53.91.94.44.91.91.04.85.44.7-2.25.93.73.04.95.24.40.33.52.82.7-8.44.95.82.74.55.32.40.47.34.54.2-3.75.92.63.67.05.15.20.14.84.43.3-4.28.13.73.16.44.23.50.13.03.82.6-4.43.02.33.63.85.34.30.23.21.11.2-2.33.51.61.73.42.82.00.42.62.02.0-2.94.82.31.43.93.51.72.26.93.11.11.310.22.13.18.64.14.00.03.84.02.1-3.58.42.73.16.93.73.60.04.75.14.1-15.312.43.83.410.76.43.20.01.12.93.2-4.54.03.03.14.03.93.70.12.14.54.3-0.97.43.43.86.74.34.32.07.53.00.91.811.02.03.09.04.04.00.13.83.33.5-4.78.12.32.44.32.82.60.04.24.92.4-7.14.33.43.33.44.33.10.32.31.10.7-0.73.93.42.63.12.82.20.51.62.91.2-2.43.72.22.03.02.52.31.02.42.81.9-2.24.73.82.54.53.02.51.43.53.21.9-4.84.63.82.54.83.42.53.81.70.6-0.2-4.51.71.91.82.42.31.11.73.22.92.2-0.94.02.62.44.33.52.72.32.11.71.7-9.37.43.41.66.94.81.715.72.32.92.3-3.45.72.92.35.84.52.445.72.82.41.8-4.35.52.82.45.34.12.533.46.36.35.2-1.26.95.25.37.25.85.318.66.96.76.02.28.14.65.07.95.35.37.06.17.34.5-6.68.37.46.59.07.86.02.45.15.25.0-2.13.75.05.54.05.05.51.53.44.04.0-2.64.7-8.22.64.63.83.53.11.82.82.0-3.04.7-10.41.53.92.62.2Latin America7.41.21.0-0.3-7.26.12.32.45.22.52.3- Argentina0.72.8-2.6-2.0-9.910.33.02.37.22.52.5- Brazil2.41.31.81.2-3.94.60.71.54.92.12.3- Mexico1.82.12.2-0.2-8.24.82.22.65.92.52.4MENA5.61.81.11.6-3.23.45.43.83.13.52.9- Saudi Arabia1.2-0.70.10.1-4.32.79.06.02.73.72.3Sub-Saharan Africa3.32.42.52.5-2.14.33.63.73.13.33.40.61.21.50.1-6.44.92.01.73.92.21.854.14.44.53.6-2.46.13.64.56.04.84.4100.03.63.52.8-3.35.83.23.55.74.53.585.03.83.73.0-2.85.93.33.75.84.53.787.93.83.83.0-2.85.93.33.75.84.53.7DenmarkWorld GDP, volume (percentage change on preceding year, 2017-2023)Spring 2022Autumn 2021forecastforecastEUEuro areaBelgiumBulgariaCzechiaLuxembourgGermanyEstoniaIrelandGreeceSpainFranceCroatiaItalyCyprusLithuaniaLatviaPortugalRomaniaSloveniaSlovakiaFinlandSwedenSwitzerlandAustraliaCanada- North MacedoniaCandidate CountriesHungaryMaltaNetherlandsAustriaPolandJapan- Albania- Montenegro- Serbia- TurkeyPotential CandidatesIcelandNorway- South AfricaKoreaUnited KingdomUnited StatesAdvanced economiesEmerging and developing Asia- China- India- IndonesiaRussiaEastern Neighbourhood and Central AsiaWorld excluding euro area(a) Relative weights in %, based on GDP (at constant prices and PPS) in 2021.Emerging and developing economiesWorldWorld excluding EU 
  
European Economic Forecast, Spring 2022 

178 

Table 55:29.04.2022( a )201720182019202020212022202320212022202332.35.83.83.0-8.410.75.04.69.77.25.326.75.63.62.7-9.111.05.14.79.77.35.21.311.98.74.9-14.224.57.17.418.510.49.50.013.24.02.7-27.746.64.85.426.29.55.20.01.87.05.8-46.281.13.86.358.418.74.30.08.312.87.2-10.912.35.87.212.911.59.90.18.27.57.6-4.119.38.68.514.59.88.51.112.48.84.6-14.824.97.07.318.810.49.70.05.11.7-4.7-30.212.314.37.910.215.97.90.71.7-1.21.1-1.24.85.03.55.54.83.12.1-0.33.3-0.8-6.012.54.84.76.55.75.01.23.45.13.4-9.88.05.34.78.05.74.72.31.43.82.3-9.71.56.34.53.07.74.63.46.63.8-1.5-11.811.73.63.412.65.23.22.92.54.00.2-1.89.65.84.79.66.34.73.25.72.83.4-13.0-1.35.31.20.57.31.09.24.12.8-0.1-13.64.65.75.46.17.73.865.95.13.71.6-8.99.15.24.58.66.94.720.28.94.60.0-1.416.93.34.211.63.64.113.27.94.00.42.118.22.13.113.62.33.32.410.14.8-2.0-6.120.14.96.06.94.94.50.912.56.3-7.4-3.915.65.55.011.06.25.01.07.05.14.4-3.616.0-18.53.49.53.94.42.05.05.60.7-4.13.2-16.13.94.95.83.0Latin America4.73.93.50.6-8.66.95.25.48.45.03.6- Argentina0.3-0.1-0.312.2-13.19.05.14.16.77.64.9- Brazil1.25.23.4-1.7-1.43.52.06.69.04.53.0- Mexico1.84.26.01.5-7.36.95.84.08.75.74.1MENA4.94.44.1-2.3-13.010.66.44.99.56.04.70.9-0.48.8-3.4-13.40.68.93.90.68.34.21.31.92.51.3-9.73.65.14.48.85.74.80.5-0.32.8-3.4-12.010.06.33.911.24.13.234.16.84.3-0.1-5.113.32.34.510.34.44.1100.05.73.91.0-7.610.44.24.59.16.14.567.75.63.90.1-7.210.33.84.58.95.64.173.35.74.00.4-7.110.23.94.58.95.64.2EU (b)Euro area (b)- Albania- MontenegroCandidate CountriesWorld exports of goods and services, volume (percentage change on preceding year, 2017-2023)Spring 2022Autumn 2021forecastforecastUnited KingdomUnited States- North Macedonia- Serbia- TurkeyIcelandNorwaySwitzerlandAustraliaCanadaJapanKorea(b) Intra- and extra-EU trade.Sub-Saharan AfricaAdvanced economiesEmerging and developing Asia- China- India- IndonesiaEaster Neighbourhood and Central AsiaRussiaEmerging and developing economiesWorld(a) Relative weights in %, based on exports of goods and services (at current prices and current exchange rates) in 2021.- Saudi Arabia- South AfricaWorld excluding euro areaWorld excluding EU29.04.2022EUEuro AreaCandidate CountriesUSAUnited KingdomJapanOther Advanced EconomiesChinaRest of AsiaRussiaMENALatin AmericaSub-Saharan AfricaEU59.847.31.77.85.61.313.64.62.01.63.42.21.2Euro area57.846.01.68.45.81.414.25.02.11.53.62.41.3Belgium68.060.31.25.77.20.912.12.02.70.82.61.52.2Bulgaria66.048.010.92.42.20.45.23.61.61.83.90.81.2Czechia79.064.61.62.63.90.67.52.00.72.01.61.00.6Denmark53.637.21.210.46.52.217.55.32.11.02.72.60.9Germany53.237.01.88.95.41.715.28.02.41.92.82.61.0Estonia69.551.31.26.61.90.79.81.70.94.61.81.30.5Ireland37.634.10.530.58.52.715.86.71.60.61.71.50.7Greece53.139.510.94.43.51.17.62.81.80.713.21.81.3Spain61.254.11.75.26.51.012.22.91.60.96.45.11.4France51.444.91.39.16.11.816.35.42.91.35.82.41.9Croatia74.361.38.83.51.50.54.71.01.81.12.70.50.4Italy50.340.32.610.44.62.015.83.82.51.85.92.91.1Cyprus49.836.80.52.47.20.014.21.711.10.713.52.62.5Latvia64.948.21.33.55.40.510.11.41.28.81.80.91.6Lithuania61.843.11.13.83.41.19.61.31.08.42.20.70.9Luxembourg79.369.00.93.13.70.58.41.80.91.01.91.10.7Hungary77.257.62.93.42.90.66.12.40.71.71.21.50.4Malta49.342.81.64.12.05.016.46.03.80.48.02.03.3Netherlands69.359.30.94.87.80.614.22.31.30.92.11.71.6Austria67.652.21.46.62.51.111.43.81.51.42.01.80.6Poland75.058.11.43.15.30.49.31.50.92.61.70.90.6Portugal66.761.31.35.75.80.410.32.60.60.63.82.85.0Romania71.555.25.12.53.20.86.12.10.91.75.01.10.8Slovenia76.551.14.82.01.40.37.41.40.92.42.00.70.3Slovakia76.745.91.34.43.90.37.04.80.22.11.50.80.3Finland55.439.21.37.93.72.412.46.32.55.02.42.51.2Sweden54.942.11.17.74.81.719.15.72.01.42.82.21.0Table 56: Export shares in EU trade (goods only - 2019) 
  
  
Statistical Annex 

179 

Table 57:29.04.2022( a )201720182019202020212022202320212022202330.95.64.24.6-8.29.35.04.78.67.15.225.45.23.84.7-9.08.85.14.88.27.25.11.410.5-4.0-3.04.74.91.84.84.95.27.00.08.42.42.3-19.231.62.93.215.06.43.30.08.49.22.7-20.113.71.44.814.55.03.70.05.310.78.9-10.913.94.66.012.010.68.90.211.110.810.7-3.619.38.17.314.18.97.61.110.6-6.2-5.47.62.00.94.53.14.57.00.011.80.9-8.5-21.620.312.67.58.612.17.20.51.91.45.1-11.92.08.54.15.15.12.91.7-0.90.7-0.2-4.55.35.65.15.35.04.01.07.84.3-1.5-13.04.98.95.84.98.95.82.34.63.30.4-10.86.47.14.67.57.44.63.63.33.81.0-7.25.22.32.78.44.82.42.78.91.7-1.9-3.38.74.53.48.64.53.43.52.93.12.9-15.83.85.82.31.28.92.213.14.44.11.2-8.914.08.72.714.37.83.567.55.13.72.1-8.19.45.74.09.16.94.419.39.27.1-3.3-5.414.84.95.99.95.86.311.87.37.3-3.7-1.011.03.65.89.15.36.32.813.34.0-4.0-13.833.85.36.013.25.26.00.810.814.6-9.5-14.812.411.25.010.711.25.01.07.17.58.3-13.514.2-14.32.89.85.54.91.517.32.73.4-12.116.7-25.85.47.34.44.04.95.34.5-1.2-12.315.23.03.710.84.94.20.314.2-5.6-21.1-10.721.55.74.317.15.95.41.19.97.54.6-8.616.1-0.73.110.95.44.01.96.46.4-0.7-13.713.75.04.613.15.04.44.42.90.8-1.9-15.55.37.84.84.75.44.00.8-0.32.22.9-16.16.815.27.36.78.35.11.40.86.37.6-13.20.08.44.46.83.63.40.41.53.20.5-17.49.512.84.713.04.64.032.57.25.3-1.6-9.112.73.25.38.95.45.4100.05.84.20.9-8.410.44.94.49.16.44.769.15.94.3-0.6-8.510.94.94.39.36.14.574.66.04.4-0.3-8.311.04.84.39.46.14.6World imports of goods and services, volume (percentage change on preceding year, 2017-2023)Spring 2022Autumn 2021forecastforecastAustralia- Serbia- TurkeyIcelandNorwaySwitzerlandEU (b)Euro area (b)Candidate Countries- Albania- North Macedonia- MontenegroRussiaCanadaJapanKoreaUnited KingdomUnited StatesAdvanced economies- China- India- IndonesiaEaster Neighbourhood and Central AsiaEmerging and developing AsiaWorld excluding EU(b) Intra- and extra-EU trade.Latin America- Argentina- Brazil- Saudi ArabiaEmerging and developing economiesWorldWorld excluding euro area(a) Relative weights in %, based on imports of goods and services (at current prices and current exchange rates) in 2021.- MexicoMENASub-Saharan Africa- South Africa29.04.2022EUEuro AreaCandidate CountriesUSAUnited KingdomJapanOther Advanced EconomiesChinaRest of AsiaRussiaMENALatin AmericaSub-Saharan AfricaEU61.649.41.84.83.91.310.47.13.33.12.51.81.2Euro area59.748.11.75.44.21.410.97.13.52.92.92.01.4Belgium61.054.91.28.14.32.410.54.53.61.92.32.41.9Bulgaria62.244.19.61.11.30.44.24.31.78.62.81.20.3Czechia75.259.41.11.81.91.06.38.51.62.30.30.30.2Denmark67.648.31.13.33.60.511.67.03.22.40.71.80.5Germany63.645.31.84.93.71.611.76.83.32.40.91.51.0Estonia72.854.00.61.61.90.75.04.31.410.40.20.30.8Ireland38.634.40.713.232.10.937.43.92.20.50.41.60.6Greece50.140.04.42.22.10.66.59.62.06.612.71.10.6Spain55.748.82.44.13.81.08.57.44.10.97.24.72.9France64.957.71.35.54.41.010.65.32.81.24.11.11.4Croatia77.960.24.21.61.00.23.23.91.03.12.00.50.3Italy57.147.52.84.52.61.08.27.23.63.16.12.11.4Cyprus63.657.60.71.86.11.213.05.34.64.21.32.10.6Latvia65.350.20.71.72.40.26.93.91.914.80.10.90.1Lithuania65.945.30.82.12.40.26.24.00.812.60.70.50.2Luxembourg81.277.50.25.21.22.03.56.30.60.10.20.30.3Hungary73.356.82.31.71.61.46.56.32.13.80.50.40.1Malta38.034.44.91.113.10.823.65.82.815.04.72.30.5Netherlands41.635.31.08.04.91.913.413.75.85.42.53.62.2Austria78.664.91.23.11.60.76.92.62.81.60.90.30.1Poland67.456.71.42.22.50.96.98.72.35.21.31.00.4Portugal73.368.41.31.92.50.55.84.32.11.13.02.23.3Romania73.152.95.71.01.80.44.15.01.33.51.00.60.2Slovenia64.349.38.10.91.00.413.26.72.31.41.21.10.3Slovakia80.044.11.20.51.70.26.53.52.04.40.40.20.1Finland68.544.10.62.32.40.67.13.81.313.60.21.40.4Sweden68.553.21.02.94.40.914.35.82.52.10.40.90.5Table 58: Import shares in EU trade (goods only -  2019) 
  
  
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Table 59:29.04.202220162017201820192020202120222023202120222023483.4463.3389.8407.4475.6397.4154.4251.8447.7412.0451.9322.3289.4207.6252.5291.0205.1129.9216.0318.0307.4337.2459.7446.5396.4395.1439.7399.5194.2288.4434.4416.1455.4327.5306.8240.2275.4298.6245.4163.3247.4308.6310.4339.7-56.4-77.2-56.3-37.1-58.3-40.9-58.9-73.0-56.9-64.9-76.9-2.9-3.2-3.4-3.5-3.4-4.5-4.7-5.0-3.9-4.0-4.2-1.8-2.1-2.4-2.3-1.9-2.3-2.3-2.5-2.3-2.2-2.3-2.0-2.0-2.1-2.2-2.1-2.8-2.9-3.0-2.3-2.4-2.4-3.5-4.5-6.0-6.3-5.9-7.0-8.4-9.0-6.8-7.3-7.8-46.2-65.4-42.4-22.8-45.0-24.3-40.6-53.4-41.6-49.2-60.1-0.8-1.5-1.5-1.0-0.7-1.3-1.5-1.9-0.7-0.7-1.011.720.430.712.8-3.256.572.480.9-0.11.32.061.263.971.670.661.4110.2113.5117.269.069.575.5-5.810.520.848.140.547.142.039.346.836.233.1-19.2-19.1-16.8-13.9-29.74.119.720.511.820.221.150.843.810.21.428.216.2-23.2-19.917.820.522.5116.5113.6110.179.880.676.262.853.5104.6109.8120.5-188.0-181.0-189.9-176.3-166.0-214.7-279.7-295.1-195.3-216.5-230.8-771.1-823.2-889.8-876.2-892.6-1109.4-1327.3-1313.9-1114.9-1218.0-1273.4-175.4-228.8-385.6-346.3-288.8-463.8-1043.1-955.9-507.1-657.9-680.9423.7367.5199.2259.9512.6463.5314.7371.8526.1460.5436.2488.9475.9380.1393.0515.0568.5498.5503.7584.3541.3525.3-107.5-148.1-186.7-157.7-95.4-179.3-255.0-216.4-145.6-161.0-174.815.318.8-0.23.528.343.847.655.330.823.228.4-7.2-0.16.6-5.0-9.09.412.112.76.81.0-1.990.2114.7195.9165.490.5176.0286.9254.6139.3159.7164.98.234.310.47.372.527.043.766.083.284.882.3- Argentina4.4-5.4-0.718.214.616.818.019.014.216.117.1- Brazil44.557.343.426.532.436.243.556.337.838.738.4- Mexico-13.1-11.0-13.85.234.08.96.74.021.120.220.0MENA90.2198.4354.9249.988.9225.4324.0308.6248.9263.5270.455.898.5168.7121.347.985.9114.798.685.998.3102.2-13.716.428.32.8-5.57.910.28.07.6-2.4-1.61.94.41.72.617.828.525.822.328.216.715.7591.3731.3795.3680.2750.0909.2991.61021.81011.8967.0950.2415.9502.5409.7333.9461.3445.4-51.565.9504.7309.2269.3-67.539.219.8-73.5-14.348.0-206.0-185.957.1-102.9-182.6-43.856.013.3-61.221.645.9-245.7-222.570.3-106.9-186.1- TurkeyNorway- AlbaniaIcelandAustraliaSwitzerland- North Macedonia- Serbia- MontenegroEUEU, adjusted¹Euro areaEuro area, adjusted¹Candidate CountriesWorld merchandise trade balances (fob-fob, in billions of US dollar, 2016-2023)Spring 2022Autumn 2021forecastforecastAdvanced economiesEmerging and developing Asia- China- India- IndonesiaCanadaJapanKoreaUnited KingdomUnited StatesWorld excluding euro areaEastern Neighbourhood and Central Asia¹ See note 8 on concepts and sources.- South AfricaEmerging and developing economiesWorld excluding EULatin America- Saudi ArabiaSub-Saharan AfricaWorldRussia 
  
Statistical Annex 

181 

Table 60:29.04.202220162017201820192020202120222023202120222023474.3511.4518.1434.0414.9504.4350.0450.8505.9522.4594.9363.6339.4306.0287.8276.5296.3294.3386.7359.4389.7443.8432.2468.2493.6384.4343.9456.6336.8428.0450.3473.4536.6297.2315.2281.2244.7191.8246.5283.2367.1319.9353.2400.4-30.2-44.4-25.1-0.6-40.2-22.9-38.3-53.3-27.3-25.2-22.7-0.9-1.0-1.0-1.2-1.3-1.4-1.5-1.5-1.3-1.3-1.3-0.7-0.8-0.9-0.8-1.2-0.5-0.7-0.8-1.0-0.9-1.0-0.3-0.10.0-0.4-0.4-0.5-0.6-0.5-0.5-0.4-0.3-1.1-2.3-2.4-3.6-2.2-2.8-4.2-4.4-2.8-2.9-2.9-27.1-40.2-20.75.5-35.0-17.7-31.3-46.1-21.8-19.8-17.21.81.21.11.60.4-0.10.00.00.40.70.816.421.934.811.74.074.089.198.114.716.718.156.946.141.739.416.473.074.277.141.347.455.6-41.2-36.1-29.97.736.248.333.331.643.227.725.6-47.3-46.2-41.2-35.4-29.21.210.811.45.915.016.8197.0203.1176.6176.3148.9167.7113.2117.3175.1169.1167.397.975.277.559.775.988.361.650.3104.6109.3120.2-145.1-98.1-112.5-76.7-69.1-82.5-150.5-163.4-89.7-100.8-115.6-403.7-372.9-440.3-479.8-587.1-831.0-979.4-913.0-819.9-883.5-893.7313.0413.4334.2272.4146.5201.6-258.3-107.5118.585.7162.9210.5181.1-41.4101.9362.3289.0207.5266.9356.2282.0210.5191.3188.724.1102.9274.0333.1315.1302.9365.3300.4225.7-12.1-38.2-65.6-29.832.7-39.2-105.5-55.3-20.9-26.0-34.0-17.0-16.2-30.6-30.3-4.43.31.88.9-10.6-18.8-13.9-25.8-13.9-6.3-14.5-9.1-7.3-5.9-9.0-10.6-15.2-21.225.332.5116.265.332.3118.7246.7204.171.587.089.5-99.5-92.7-138.5-100.61.1-79.1-64.1-64.0-18.5-30.8-44.8- Argentina-15.1-31.2-27.1-3.73.36.52.61.33.42.01.1- Brazil-24.5-22.0-51.5-65.0-24.5-28.1-27.1-34.4-11.3-17.7-25.0- Mexico-24.4-20.4-25.1-4.026.2-4.6-8.8-13.17.64.53.2MENA-83.131.5176.5101.2-31.237.9200.4127.864.191.391.2-23.810.572.038.2-21.629.691.229.332.242.736.1-43.5-25.5-26.5-47.3-35.6-11.4-24.0-46.3-43.4-53.8-62.6-8.5-9.1-12.3-10.16.815.35.0-3.611.54.21.6-16.1113.080.0106.1319.9347.7560.7479.5419.2360.5262.7296.9526.4414.2378.5466.4549.3302.4371.9537.8446.2425.6-177.315.0-103.9-55.551.544.9-47.7-78.931.9-76.2-169.3-135.358.2-79.4-5.9122.592.7-34.5-56.187.5-27.1-111.1AustraliaUnited KingdomWorld current-account balances (in billions of US dollar, 2016-2023)Spring 2022Autumn 2021forecastforecast- North MacedoniaEUEU, adjusted¹Euro areaEuro area, adjusted¹Candidate Countries- Montenegro- Albania- Serbia- TurkeyNorwaySwitzerlandIcelandEmerging and developing Asia- China- India- IndonesiaEastern Neighbourhood and Central AsiaCanadaJapanKoreaUnited StatesAdvanced economies- Saudi ArabiaLatin AmericaSub-Saharan AfricaWorldRussiaWorld excluding euro area¹ See note 8 on concepts and sources.- South AfricaEmerging and developing economiesWorld excluding EUTable 61:29.04.202220162017201820192020202120222023202120222023-16.023.929.4-9.3-35.169.346.5-9.8-32.347.5-3.744.254.871.064.341.870.7103.693.543.463.961.640.048.560.157.536.659.895.086.638.053.151.2Annual percentage change (USD)Price per barrel - Brent (USD) - Brent (EUR)Crude oil prices, 2016-2023Spring 2022Autumn 2021forecastforecast 
  
  
European Economic Forecast, Spring 2022 

182 

          1.   2.  9.   10.11. 3. 4.   5.     6.                                                                                 Note on concepts and sourcesThedirectorategeneralforeconomicandfinancialaffairs(DGECFIN)produces,underitsownresponsibility,short-termfully-fledgedeconomicforecastsinSpringandAutumn.TheseforecastscovertheprincipalmacroeconomicaggregatesfortheMemberStates,thecandidatecountries,theEuropeanUnionasawhole,theeuroareaandtheinternational environment.Thecreationoftheinternalmarketin1993reducedbordercontrolsandformalities,andaccordinglythescopeandprecisionofintra-EUtradecoverage.Typically,intra-EUimportsareunderestimatedcomparedtointra-EUexports,leadingtoanoverestimationofthesurplus.Forthepastthe"adjusted"balancesareEurostatestimatesforEUandECBestimatesfortheeuroarea.Forthefuture,theyareECFIN'sforecastsbasedontheextrapolation of the discrepancies observed in 2019.EUandeuroareaaggregatesforgeneralgovernmentdebtarepublishedonanon-consolidatedbasis(i.e.notcorrectedforintergovernmentalloans,includingthosemadethroughtheEuropeanFinancialStabilityFacility).Geographical zones are defined as follows :Data for 2022 and 2023 are forecasts. The source for all tables is the European Commission, unless otherwise stated. Historical data for the Member States are based on the European System of Accounts (ESA 2010). US national accounts are based on SNA 2008, whilst the Japanese accounts use SNA 1993. Due to differences in revision schedules of annual and quarterly national accounts, annual and quarterly figures may not be fully consistent for some Member States. Notes: Due to a break in historical employment data in 2021 for Romania, employment-related  variables have been affected (Total employment, Unemployment rate, Unit labour cost whole economy, Real unit labour cost, Potential GDP, Output gap, Labour productivity (GVA per occupied person), Cyclically-adjusted NLNB, Cyclically-adjusted primary balance, Structural budget balance).   Euro area : Tables5and6ondomesticdemandandfinaldemandrespectively,present data including inventories.EA19(BE,DE,EE,IE,EL,ES,FR,IT,CY,LV,LT,LU,MT,NL,AT,PT,SI,SK, and FI).   European Union :Quarterly EU and euro-area GDP growth rates are aggregated using estimates for 27 Member States, including unpublished quarterly forecasts for CY, EL, IE and MT. All countries in that region.   MENA (Middle East and Northern Africa) :Algeria,Tunisia,Morocco,Egypt,Israel,Jordan,Lebanon,Lybia,Iraq,Iran,Yemen,SaudiArabia,Bahrain,Oman,UnitedArabEmirates, Kuwait, and Qatar.InTables17and18,thedataarebasedonthenationalindexfortheUnited Kingdom, USA and Japan.EU (EA19, BG, CZ, DK, HR, HU, PL, RO, and SE).   Candidate countries : Albania, Montenegro, North Macedonia, Serbia and Turkey.Theoutputgapiscalculatedwithreferencetopotentialoutputasestimatedviaaproductionfunction,wheretheincreaseinthecapitalstockandthedifferencebetweenactualunemploymentandtheNAWRUplayakeyrole.Duetotechnicalreasons,theinflowsofpeoplefleeingthewarinUkrainehavenotbeenintegratedinthepopulationofworkingageforecasts.    Potential candidates :Bosnia-Herzegovina and Kosovo.    Advanced economies :EU,UnitedKingdom,candidatecountries,Iceland,Norway,Switzerland,Australia,Canada,HongKong,Japan,Korea,NewZealand, Singapore, Taiwan and the United States.Employmentdatausedintables24and26-30arebasedonfull-time-equivalents(FTEs),whereavailable.Currently,Spain,France,Italy,andtheNetherlandsreportFTEdata.IntheabsenceofFTEdata,employmentisbasedonnumbersofpersons.InthecalculationofEUandeuro-areaaggregates,priorityisgiventoFTEdata,asthisisregardedasmorerepresentative of diverse patterns of working time.   Emerging and developing Asia:AllcountriesinthatregionexcepttheonesincludedintheAdvanced economies and the Asian MENA countries.   Latin America :8.    Sub-Saharan Africa : All countries in that region except the African MENA  countries.EUandeuro-areadataareaggregatedusingexchangerates.WorldGDPisaggregatedusingPurchasingPowerStandards(PPS).Inthetablesonworldtradeandinternationalpayments,theaggregationiscarriedoutonthebasisofcurrentexchangerates.Tables48-51,59and60showalsoEUandeuro-area"adjusted"balances.Theoretically,balancesofEUandeuroareavis-à-visthirdcountriesshouldbeidenticaltothesumofthebalancesoftheindividualcountriesintheEUortheeuroarea.However,intra-EUorintra-euro-areabalancesarenon-zerobecauseofreportingerrors. 7. Source:NationalAccounts(ESA2010),exceptforUScurrent-accountintables49,51,and60(BalanceofPayments).Discrepancieswithbalanceofpaymentsstatisticsmayariseduetomethodologicaldifferencesandrevision schedules.   Eastern neighbourhood and Central Asia:Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Moldova, Ukraine, Uzbekistan, Tajikistan, Turkmenistan. 
  
 
PREVIOUS EUROPEAN ECONOMIC FORECASTS 

2.  Forecast publications (2017-2022) 

Winter 2022: Growth expected to regain traction after winter slowdown 

Autumn 2021: From recovery to expansion, amid headwinds 

Summer 2021: Reopening fuels recovery 

Spring 2021: Rolling up sleeves 

Winter 2021: A challenging winter, but light at the end of the tunnel 

Autumn 2020: Rebound interrupted 

Summer 2020: A deeper recession with wider divergences 

Spring 2020: A deep and uneven recession, an uncertain recovery 

Winter 2020: Offsetting forces confirm subdued growth 

Autumn 2019: A challenging road ahead 

Summer 2019: Growth clouded by external factors 

Spring 2019: Growth continues at a more moderate pace 

Winter 2019: Growth moderates amid high uncertainty 

Autumn 2018: Less dynamic growth amid high uncertainty 

Summer 2018: Resilient growth amid increased uncertainty 

Spring 2018: Expansion to continue amid new risks 

Winter 2018: A solid and lasting expansion 

Autumn 2017: Continued growth in a changing policy context 

Spring 2017: Steady growth rates ahead 

Winter 2017: Navigating through choppy waters 

February 2022 

November 2021 

July 2021 

May 2021 

February 2021 

November 2020 

July 2020 

May 2020 

February 2020 

November 2019 

July 2019 

May 2019 

February 2019 

November 2018 

July 2018 

May 2018 

February 2018 

November 2017 

May 2017 

February 2017 

3.  Selected economic analyses (2017-2022)  

Production bottlenecks based on the Business and Consumer Surveys 

February 2022 

An update on energy price development: pass-through from wholesale to retail  

Business managers are upbeat about investment this year 

Supply side bottlenecks 

Energy prices 

Labour market: slack or tight? 

Housing market 

New survey-based measures of economic uncertainty 

November 2021 

Selling price expectations of business managers on the rise 

July 2021 

An update on the tourism sector in the EU: insights from early 2021 data 

183 

 
 
 
 
 
 
 
 
 
 
 
 
 
European Economic Forecast, Spring 2022 

The role of savings in determining the recovery path 

May 2021 

Will  consumers  save  the  EU  recovery?  Insights  from  the  Commission’s  consumer 
survey 
Spillovers from 2021 US fiscal policy 

The pandemic and inflation: technical factors driving volatility 

The incorporation of the Recovery and Resilience Facility in the forecast 

An update on the tourism sector: insights from big data 

February 2021 

The  Trade  and  Cooperation  Agreement  between  the  EU  and  the  UK  and  model 
simulation of the short-term economic impact of the included Free Trade Agreement       

The road out of the crisis: an update of alternative scenarios 

The road out of the crisis remains bumpy and uncertain 

November 2020 

Macroeconomic effects of Next Generation EU 

Tourism in pandemic times: an analysis using real-time big data 

Technical specifications underpinning the QUEST simulations of NGEU 

Some technical elements behind the forecast 

Technical assumption on the future trading relations between the EU and the UK and 
model   simulation of their economic impact 
The inclusion of  Next  Generation EU and its Recovery and Resilience Facility in the 
forecast 

The impact and recovery from COVID-19: a model-based scenario analysis 

July 2020 

How the pandemic shaped the forecast 

Global value chains and protectionism 

What is behind the slowdown? A model-based analysis of growth drivers 

The procyclicality of potential output 

May 2020 

November 2019 

Looking at euro area GDP growth in 2019 through the lens of an estimated model 

May 2019 

Euro area banks 10 years after the crisis 

The impact of European Structural and Investment Funds on near-term forecasting 

Changes to HICP methodology 

How resilient is the economy to oil price shocks? 

November 2018 

Implications of higher yields for the banking sector and private sector funding in the 
euro area 
Euro area GDP growth drivers in 2019 – analysis using a structural model 

184 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Labour market slack in the euro area 

Has inflation become more ‘global’? 

Residential construction 

Drivers of the euro area recovery - evidence from an estimated model 

Previous European Economic Forecasts 

May 2018 

Main drivers of growth in 2018 - shock decomposition from an estimated model 

November 2017 

What drives wage developments? 

Automatic stabilisers in the euro area: a model-based assessment 

The economic impact of uncertainty assessed with a BVAR model 

May 2017 

US macroeconomic policies and spillovers to the euro area 

Main drivers of growth in 2017 - shock decomposition from an estimated model 

Inflation: between temporary effects and slow trends 

China’s economy in transition:  dealing  with the twin challenge of  deleveraging and 
rebalancing growth 
A  ‘new  modesty’?  Level  shifts  in  survey  data  and  the  decreasing  trend  of  ‘normal’ 
growth 

February 2017 

185 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN ECONOMY INSTITUTIONAL PAPERS SERIES 

European  Economy  Institutional  Papers  series  can  be  accessed  and  downloaded  free  of  charge  from  the 
following address:  
https://ec.europa.eu/info/publications/economic-and-financial-affairs-
publications_en?field_eurovoc_taxonomy_target_id_selective=All&field_core_nal_countries_tid_selective=All
&field_core_date_published_value[value][year]=All&field_core_tags_tid_i18n=22621. 

Titles published before July 2015 can be accessed and downloaded free of charge from: 
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http://ec.europa.eu/economy_finance/publications/european_economy/index_en.htm  
(the main reports, e.g. Economic Forecasts) 
http://ec.europa.eu/economy_finance/publications/occasional_paper/index_en.htm  
(the Occasional Papers) 
http://ec.europa.eu/economy_finance/publications/qr_euro_area/index_en.htm 
(the Quarterly Reports on the Euro Area) 

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