The latest forecasts come at a tricky time for the European Union as its Covid vaccine rollout faces issues around production, supply and red tape. At the same time, European governments are concerned about mutations of the virus that are deemed more contagious. The longer the health emergency drags, the longer EU countries have to extend social restrictions and lockdowns, which takes their toll on the economy.
Speaking to CNBC Thursday, the European Commissioner for Economic Affairs Paolo Gentiloni said: “We are still in a challenging winter with lockdowns an restrictive measures going on all over Europe.” The European Commission’s forecasts assume that social restrictions will be slightly eased in the second quarter of 2021, but that there will nonetheless be some sectoral measures still in place in 2022.
Going forward, the European Commission expects 2022 GDP in the euro area to reach 3.8%, having projected a 3% GDP rate for next year in November. Looking at individual countries, Germany is seen growing by 3.2% in 2021, having contracted 5% in 2020. France on the other hand is expected to see a GDP rate of 5.5% this year, after dropping more than 8% in 2020.