European Commission forecast: July 2021

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Bathers seen sunbathing at Malagueta beach on a hot summer day in Malaga.

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LONDON – The economic outlook has improved for the euro area, according to the latest forecast from the European Commission on Wednesday, but the institution warned that the delta variant is a “sharp reminder” that the pandemic is not over.

The EU executive in May forecast a GDP rate of 4.3% for the euro area in 2021, followed by a GDP rate of 4.4% in 2022. Now the committee has updated its forecast and expects a growth rate of 4.8% this year. , and 4.5% for 2022.

By comparison, the European Central Bank said in June that the euro area is expected to grow 4.6% in 2021 and 4.7% next year.

“The EU economy is expected to experience its fastest growing in decades this year, fueled by strong demand both domestically and globally and a faster than expected reopening of service sectors since spring”, Paolo Gentiloni , European Commissioner for the Economy. , said in a statement.

Based on the latest forecast, the committee expects the eurozone to return to pre-crisis levels in the last quarter of this year, one quarter earlier than expected.

However, Gentiloni also said: “Above all, we need to redouble our vaccination efforts, building on the impressive progress made in recent months: the spread of the Delta variant is a stark reminder that we are not yet out of the shadows. of the pandemic. “

The latest economic forecasts come at a time when policymakers are increasingly concerned about the upsurge in Covid-19 infections. In France, for example, the government raised the possibility of a fourth wave at the end of July – something the country’s finance minister described as “the only thing that could jeopardize the economic recovery”.

According to the latest forecasts, France could grow at a rate of 6% this year against an earlier estimate of 5.7%.

Regarding Europe’s traditional economic engine, Germany, the commission now expects a GDP rate of 3.6% in 2021, up from an estimated 3.4% in May.

The revival of tourism

The committee also mentioned that “there is evidence of a resumption of intra-EU tourism activity, which is expected to benefit more from the entry into force of the EU’s new COVID digital certificate from July 1” .

This document allows people who test negative for the virus, who have recovered from it or who have been fully vaccinated, to travel more easily within the block of 27 members. This is essential for economies dependent on tourism, namely Greece, Spain, Italy and Portugal.

Spain is expected to grow 6.2% this year, the second highest growth rate in the bloc.

The committee noted that there have been more hires in recent weeks in Spain and that business and consumer confidence has also improved in the EU’s fourth largest market.


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