The European Commission has upwardly revised its latest forecasts for economic growth this year and next but warned that the delta variant of COVID-19 shows the pandemic is not over.
The executive arm of the European Union forecasts a 4.8% growth rate this year, and 4.5% for 2022.That’s up from a previous forecast in May of a 4.3% Gross Domestic Product rate in 2021, followed by a 4.4% GDP rate in 2022.
The European Central Bank said in June that the Euro zone should grow 4.6% in 2021 and 4.7% in 2022.
Based on the latest forecasts, the European Commission expects the Euro zone to return to its pre-crisis levels in the last quarter of this year — one quarter earlier than expected.
The latest economic forecasts come at a time when policymakers are increasingly worried about surging COVID-19 infections. In France, the government has raised the possibility of a fourth wave in late July — something that the country’s finance minister described as "the single thing that might jeopardize the economic recovery."
Looking at Europe’s traditional economic engine, Germany, the European Commission is now expecting a GDP rate of 3.6% in 2021 compared to 3.4% estimated in May. The commission noted that there has been a sharp rebound in tourism and more hiring in recent weeks across the European bloc of countries, and that business and consumer sentiment have also improved.
