Eurozone: Inflation worries increase

Eurozone: Inflation worries increase

(MENAFN- ING) After a strong third quarter, eurozone growth is likely to decelerate on the back of supply chain troubles, high energy prices and a pick-up in Covid-19 infections. Inflation continues to surprise on the upside, likely pushing the European Central Bank to take away some of the monetary stimulus next year Shutterstock Share With 2. 2% quarter-on-quarter growth in 3Q, the eurozone recovery proved stronger than expected. The catch-up in the services sector, in particular, was the main driver of the robust growth figure. However, this is as good as it gets. Growth is bound to decelerate from the fourth quarter onwards, not only because we're now getting close to the pre-pandemic GDP level, but also because headwinds are becoming stronger. The supply chain troubles continue to rattle the manufacturing sector, with car manufacturers especially producing much less than they want to. On top of that, we see high energy prices sapping consumption, even though the strong labour market remains supportive. Finally, Covid-19 infections are picking up again. Admittedly, the high vaccination rate limits the burden on the health care system, but services consumption tends to suffer when the fear of getting infected increases. Growing supply constraints are hampering