European Commission raises economic forecasts

The European Commission has substantially raised its economic forecasts for the next two years, as accelerated vaccination campaigns have helped the euro zone recover from the historical blow of the pandemic.

Brussels said on Wednesday that the euro zone will grow by 4.3% this year and by 4.4% by 2022, compared with previous forecasts of 3.8% growth in two years. As a result, following a historical decline of 6.6% in 2020, all member states are now expected to return to their pre-crisis output levels by the end of next year.

The increase in vaccination rates and the relaxation of the entire region’s ban on sales, as well as the improvement in export demand driven by the global rebound, have promoted the improvement of the outlook.For the first time, Brussels has fully considered the impact of the next-generation EU of 800 billion euros Economic restart package, And payment is expected to begin in the second half of the year.

“The shadow of Covid-19 is beginning to disappear from the European economy,” said EU Economic Commissioner Paolo Gentiloni (Paolo Gentiloni). “After a weak start this year, we expect strong growth in both 2021 and 2022. Unprecedented financial support has been and remains the key to helping European workers and companies tide over the difficulties.”

Europe fell into two recessions at the beginning of this year due to the new lockdown measures and the wavering of vaccination efforts. However, the European Commission said that recently there has been increasing evidence that the economy has “accelerated growth” and cited improvements in business and consumer confidence surveys.

The further relaxation of containment measures and the early expenditures of the recycling fund should mean that the economy will accelerate in the third quarter, including those economies with a large tourism industry, which should benefit from “summer social activities returning to quasi-normal” According to commission.

The strong growth in global growth is partly driven by the US stimulus plan and China’s economic growth, which will also help boost the EU’s export sector and contribute to economic recovery. According to forecasts, the EU’s overall economy will grow by 4.2% in 2021 and 4.4% in 2022, which is also an upgrade of the outlook for February. The unemployment rate in the EU will reach 7.6% this year, and then fall back to 7% in 2021.

According to the new outlook, Spain is the European Union economy that was hit hard last year, losing more than a tenth of its output, and will grow by 5.9% by 2021 and by 6.8% by 2022. Italy will grow by 4.2% this year and 4.4% next year.

Germany’s contraction in 2020 is much smaller and will grow by 3.4% by 2021 and 4.1% by 2022. France is expected to grow by 5.7% this year and 4.2% next year.

The prospects for the next ten years will be supported by the highest level of public investment (as a share of GDP) in more than a decade. This is due in part to the next-generation EU package, which aims to start payments in the summer after member states have received a restoration plan approved by the European Commission.

The European Commission’s forecast covers a total of approximately 140 billion euros in grants for this six-year plan within two years. The outlook shows that this will increase GDP by 1.2%.

However, the crisis will continue to exert tremendous pressure on public finances, and the overall deficit in the euro area this year will rise to 8% of GDP. It is expected that this proportion will be halved to 4% next year, but the legacy of the huge government spending plan will still be looming. The committee stated that the Eurozone’s overall public debt to GDP ratio will remain above 100% this year and next.

EU member states face Tense debate Later this year, regarding how to quickly cut its stimulus plan and whether to reform the EU’s fiscal rules, the EU’s fiscal rules will be suspended until 2023.

The committee said that one of the risks facing the prospects is that governments may decide to start reducing their economic support plans prematurely, thereby undermining the economic recovery. The continued effectiveness of the vaccine and the evolution of the pandemic will also play a key role in determining whether the EU’s escalation forecast is reasonable.

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