EU economy rebounds, 4.2 pct growth projected for 2021

EU economy rebounds, 4.2 pct growth projected for 2021
# 12 May 2021 22:50 (UTC +04:00)

The economy of the 27-member European Union (EU) will grow by 4.2 percent in 2021 and 4.4 percent in 2022, higher than previous estimates, the European Commission said Wednesday in its Spring Forecast, APA reports citing CNN.

The higher economic forecasts come as the vaccination rollout speeds up across the EU, resulting in a more ambitious easing of restrictions on business operations, it said.

The rebound in Europe's economy that began last summer stalled in the fourth quarter of 2020 and in the first quarter of 2021, but "the EU and euro area economies are expected to rebound strongly as vaccination rates increase and restrictions are eased," it said.

The resumed growth will be driven by private consumption, investment and a rising demand for EU exports from a strengthening global economy, it added.

A forecast by the Commission made in February had projected that the EU economy would grow by 3.7 percent in 2021 and 3.9 percent in 2022.

The COVID-19 pandemic has dealt a historic blow to the bloc, with its economy contracting by 6.1 percent in 2020.

"Recovery is no longer a mirage: it is underway. We must avoid mistakes that could undermine it: namely, a premature withdrawal of policy support," European Commissioner for Economy Paolo Gentiloni told a press conference.

"The quality, strength and duration of the recovery could still be influenced by the pandemic, but our economic fate is primarily in our own hands. And that is why we need to roll up our sleeves," he said.

Gentiloni said the faster pace of vaccinations in recent months should allow restrictions to be eased further in the second half of the year, and "for the first time since the pandemic hit, we see some optimism prevailing over uncertainty."

Noting that "the EU economy is set to grow robustly this year and next," he cautioned that "the risk of scarring, with a worsening of poverty, social exclusion and inequality, is very real."

Gentiloni said that the massive recovery package would help the EU recover to its pre-crisis level in the fourth quarter of 2021, and the eurozone would reach that point in the first quarter of 2022.

Out of the major EU economies, Spain and France, which were particularly hard hit in 2020, will have the highest growth rates in 2021, both approaching six percent, according to the Commission's estimates.

Growth will be more modest in Germany at 3.4 percent, and the Netherlands at 2.3 percent, as they were slightly less affected last year.

The Forecast also released predictions for some other European countries. It noted that Romania's economy will grow by 5.1 percent in 2021 and 4.9 percent in 2022, both improved from previous estimates in February of 3.8 percent and 4 percent, respectively.

Cyprus' economy is expected to record a 3.1 percent growth in 2021, compared with a previous forecast of 3.2 percent growth, it said.