Optimistic Consumers Keep Domestic Demand Strong

After two quarters of solid economic growth, the Euro Area is likely to enter Q4 on a weak footing. Despite business activity in both the manufacturing and service sectors remaining robust in September, supply bottlenecks due to equipment and labor shortages and high pricing pressures weighed on their rate of expansion. At the same time, domestic demand in the region is strong and consumer confidence is expected support consumer spending in the near-term. Overall, despite some loss of momentum due to supply-side disruptions, the Euro Area economy is on track to grow by 4.7 percent in 2021 and by 3.9 percent in 2022.