EU forecasts economic growth in the face of COVID limitations
The euro zone economy will rebound less than earlier expected from the coronavirus slump this year as a second wave of the pandemic put economies in new lockdowns, the European Commission said, adding 2022 growth will be stronger than earlier thought.
The forecasts predicted that GDP growth in the eurozone would reach 3.8% in 2021 and 3.7% for the entire group of 27 member states including those countries not using the euro.
With the lockdowns still in place, the euro zone economy will contract again in the first quarter of 2021 after shrinking in the last three months of 2020.
The predictions were made on the assumption that lockdown restrictions would stay in place for the first half of the year while the most vulnerable people get vaccinated, but with a gradual easing from the end of spring.
The predictions brought some good news, but also represented a reduction in growth forecasts made in November when the Commission had hoped for 4.8% growth in 2021.
Consumer price growth is to accelerate closer to the European Central Bank’s goal of below, but close to 2% over the medium term, the Commission said. It forecast inflation at 1.4% in 2021 and 1.3% in 2022, up from 0.3% in 2020.
The EU warned that the predictions were not set in stone and could be knocked back if the new coronavirus variants become more widespread leading to delayed easing of restrictions.