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ECB sees smaller pandemic recession, slow inflation recovery

    FRANKFURT, Sept 10 (Reuters) - The European Central Bank
expects the euro zone to suffer a smaller recession this year
than earlier feared but inflation is still likely to undershoot
its target for years to come, its updated economic projections
showed on Thursday.
    In what it describes as the baseline scenario, the ECB
expects GDP to shrink by 8.0 percent this year, an improvement
on the 8.7% contraction it expected in June, ECB President
Christine Lagarde said. 
    But the recovery is also likely to be slower, with 2021
growth now seen at 5.0%, slightly below the 5.2% projected three
months earlier.
    The balance of risk to the economy remains skewed to the
downside following the coronavirus pandemic, Lagarde said. 
    The ECB left its inflation projections almost unchanged,
with an increase of 0.3% seen this year, rising to 1.0% in 2021
-- slightly more than it foresaw in June -- and 1.3% in 2022. 
    The following are the ECB's quarterly growth and inflation
projections through 2022. Figures in brackets are the ECB's
previous forecast from June. 

                2020            2021           2022
GDP growth  -8.0%  (-8.7%)    5.0%  (5.2%)    3.2%  (3.3%)
Inflation    0.3%   (0.3%)    1.0%  (0.8%)    1.3%  (1.3%)

 (Reporting by Balazs Koranyi; Editing by Catherine Evans)
  
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