European Commission improves forecast for GDP growth in euro area for 2021

The European Commission (EC), in its summer economic forecast, has improved the estimate for the growth of GDP in the euro area for the current year to 4.8 percent from 4.3 percent, which were expected in the previous spring forecast, Report informs referring to Prime agency.

“Currently, GDP growth is projected at 4.8 percent in 2021 and 4.5 percent in 2022 in both the EU and the euro area,” the new forecast says.

At the same time, in the spring, the eurozone was expected to grow by 4.3 percent this year and 4.4 percent in 2022. In the European Union, the growth was expected at 4.2 percent and 4.4 percent, respectively.

The EC notes that the uncertainty and risks to economic growth are high but generally remain balanced. The threat of the spread of new strains of coronavirus underscores the importance of further accelerating vaccination.

Economic risks are associated, in particular, with the reaction of households and companies to changes in quarantine restrictions and the consequences of curtailing anti-crisis support, the European Commission notes.

The EC also raised its forecasts for inflation in the euro area and in the EU for 2021-2022. The organization expects inflation in the eurozone this year at 1.9 percent and a slowdown to 1.4 percent next year (the spring forecast was 1.7 percent and 1.3 percent, respectively).

Inflation in the EU, according to new estimates from the European Commission, in 2021 will be 2.2 percent, and in 2022 it will slow down to 1.6 percent (1.9 percent and 1.5 percent were expected in the spring, respectively). At the same time, the EC does not exclude that inflation may turn out to be higher than the forecast.