The European Union (EU) has lowered its growth forecast for 2021 as Europe is still under the grip of the coronavirus pandemic, however, it expects a strong rebound earlier than it had predicted.
In a statement on Thursday, the European Commission said that the GDP growth in the 19 countries that use the euro would reach 3.8 per cent this year, down from the 4.2 per cent it had forecast in November 2020, reports Xinhua news agency.
The Winter 2021 Economic Forecast also projected that the EU economy will grow by 3.7 per cent in 2021 and 3.9 per cent in 2022.
The Commission said that Europe’s economies are expected to reach their pre-crisis levels of output earlier than anticipated in the “Autumn 2020 Economic Forecast” largely because of the stronger than expected growth momentum projected in the second half of 2021 and in 2022.
The resurgence in fresh Covid-19 cases, together with the appearance of new, more contagious coronavirus strains have forced more containment measures but the start of vaccination programs throughout the EU “provides grounds for cautious optimism”, the Commission said.
“As increasing numbers are vaccinated over the coming months, an easing of containment measures should allow for a strengthening rebound over the spring and summer,” Commissioner for Economy Paolo Gentiloni said in a statement.
“The EU economy should return to pre-pandemic GDP levels in 2022, earlier than previously expected.
“Europeans are living through challenging times. Yet there is light at the end of the tunnel,” he said.
The Commission cwarned that the forecast was highly uncertain and made under the assumption that containment measures will remain strict and gradually eased.
On the downside, the pandemic could prove more persistent or severe leading to delays in the roll-out of vaccination programs and delays in the easing of containment measures.
There was also a risk that the crisis could leave deeper scars in the EU’s economic and social fabric, notably through widespread bankruptcies and job losses, the Commission warned.
The forecasts did not include the impact of the bloc’s massive recovery plan, which is expected to inject 750 billion euros ($910 billion) through grants and loans into the European economy.