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EU optimistic for economy, despite 'challenging' winter

By Abigail Townsend

Date: Thursday 11 Feb 2021

LONDON (ShareCast) - (Sharecast News) - The European Commission has warned that a "challenging" winter will hamper near-term economic growth, but that conditions should start to improve as the vaccine roll-out progresses.
Publishing its Winter 2021 Forecast, an update to its autumn 2020 economic outlook, the Commission predicted that the euro area economy would grow by 3.8% in both 2021 and 2022. Across the wider European Union, the economy is forecast to grow by 3.7% and 3.9% in 2021 and 2022, respectively.

It noted: "After a strong growth in the third quarter of 2020, economic activity contracted again in the fourth quarter as a second wave of the pandemic triggered renewed containment measures.

"With those measures still in place, the EU and euro area economies are expected to contract over the first quarter of 2021."

But it continued: "Economic growth is set to resume in the spring and gather momentum in the summer as vaccination programmes progress and containment measures gradually ease.

"An improved outlook for the global economy is also set to support the recovery."

In the Eurozone, inflation is forecast to increase from 0.3% in 2020 to 1.4% in 2021 before easing slightly to 1.3% in 2022.

Paolo Gentiloni, commissioner for economy, said: "Europeans are living through challenging times; we remain in the painful grip of the pandemic, its social and economic consequences all too evident.

"Yet there is, at last, light at the end of the tunnel. As increasing numbers are vaccinated over the coming months, an easing of containment measures should allow for a strengthening rebound over the spring and summer. The EU economy should return to pre-pandemic GDP levels in 2022, earlier than previously expected - thought the output lost in 2020 will not be recouped so quickly, or at the same pace across our union."