The European Commission bulletin points out a growth for the European Union (EU) of 4.2% in the year 2021 and 4.4% for 2022. Much more favorable data is presented compared to the winter forecasts, presented in February. Among the Member States, the rates continue to diverge, but it is estimated that they will return to pre-crisis values.
The Covid-19 pandemic represented a shock for the European economies, and the recovery that started in the summer of 2020 was interrupted by the 3rd wave, with new public health measures. However, the EU could see a strong rebound, as vaccination rates rise and restrictions ease. The cause of this improvement will be via private consumption, investment and the increase in EU exports.
After the impact of the pandemic on the labor market, employment has been increasing after the second half of 2020, creating a decrease in unemployment rates registered in most Member States. The forecast is to reach 7.6% of the unemployment rate in 2021 and 7% in 2022, continuing to be higher values than those registered before the crisis.
Throughout the year, inflation will vary significantly due to changes in energy prices and changes in VAT rates. The current forecast for inflation in the EU is to reach 1.9% in 2021 and 1.5% in 2022. The public debt-to-GDP ratio in the EU is expected to reach a peak this year of 94 %, predicting that in 2022 it could decrease to 93%.
All these perspectives present very high risks, as they may obtain better or worse results depending on the evolution of the epidemiological situation. If the timetable for the abolition of support measures is not adhered to in good time, it will have repercussions on the markets and on the European economy.
According to Paolo Gentiloni, Commissioner responsible for the Economy: “After the lack of dynamism registered at the beginning of the year, we project strong growth in 2021 and 2022. (…) It is obvious that maintaining the good pace of vaccination currently achieved in the EU will also be crucial, both to protect the health of our citizens and to safeguard our economies. Therefore, the time has come to get down to work”.
