Euro area: A detailed look at Q2 GDP figures

The Q2 GDP figures for euro area countries , published end of last week , confirmed the massive drop in economic activity , that had been already signaled by monthly data. The decline at -12% QoQ was in the end somewhat smaller than we had initially envisaged. We consequently are now also factoring in a less vigorous rebound in Q3 of + 9.3% after +13% previously . Despite these adjustments we have not changed our view on the general trajectory for the euro area economy and the main countries: after strong growth during the second half, the momentum will slow to around trend growth next year on the back of persistent headwinds related to the pandemic. It is only by 2022 that we expect the euro area economy to reach again its pre-crisis level of activity. From this also follows that monetary policy will remain very accommodative for the foreseeable future.