Brussels (Brussels Morning) The European Commission revised its estimates for economic growth in the eurozone this year and in 2022, but cautioned that restrictions could be reimposed if epidemiological trends take a turn for the worse.
The EC upped its estimates for inflation in the eurozone this year, while predicting that the rise in consumer prices will slow down in 2022, Reuters reported.
The Commission expects GDP growth in the eurozone to stand at 4.8% this year, 0.5% higher than the May forecast of 4.3%. It noted that many EU member states had lifted pandemic-related restrictions in the second quarter this year, giving a boost to the services sector.
Growth to slow down next year
The EC expects economic recovery from the coronavirus crisis to slow down to 4.5% next year, a little higher than the 4.4% predicted in May. It warned that risks remain high, but that they are balanced.
The Commission called for vaccination campaigns to be speeded up. European Commissioner for Economy Paolo Gentiloni said “we must 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 have not yet emerged from the shadow of the pandemic”.
The EC also acknowledged that vaccination campaigns “may start hitting acceptance constraints”, while pointing out that a return of restrictions could affect economic growth.
According Commission estimates, GDP in France will grow 6% this year, in Italy 5% and in Germany 3.6%. It expects growth in Germany to pick up pace next year to reach 4.6%, whereas it forecasts a slow-down in Italy and France to 4.2%.
The EC expects inflation in the eurozone to stand at 1.9% this year, up from the 1.7% May estimate, but to slow down to 1.4% next year. The European Central Bank expects inflation in the eurozone to be slightly below 2% this year.
The Commission observed that “inflation may turn out higher than forecast, if supply constraints are more persistent and price pressures are passed on to consumer prices more strongly”.