According to the European Commission, the Eurozone economy will grow faster than previously anticipated this year as it rebounds from the pandemic-induced recession, and will continue to expand strongly in 2022, with deficits and public debt declining.
The Commission predicted that the 19 countries' GDP would expand by 5.0% this year, following a 6.4% recession in 2020. It predicts 4.3% growth in 2022 and 2.4% in 2023. Its growth prediction for 2021 was only 4.3% in May.
"Our steps to cushion the pandemic's shock and ramp up vaccinations across the EU have certainly contributed to this success," stated Valdis Dombrovskis, Vice President of the European Commission.
Inflation would reach 2.4% in 2021, up from 0.3% in 2020, before slowing to 2.2% in 2022 and 1.4% in 2023, according to the Commission. Price increases will peak in the last four months of the current year, then slow steadily during 2022.
According to the Commission, rapid growth and the gradual withdrawal of emergency government support for the economy would help lower the Eurozone's aggregate budget deficit to 7.1% of GDP this year, down from 7.2% in 2020, and then to 3.9% in 2022 and 2.4% in 2023.
The Eurozone's public debt, which is expected to reach 100% of GDP this year, will shrink to 97.9% in 2022 and 97.0% in 2023, a faster decline than predicted in May.
"There are three key threats to this positive picture: a sharp increase in COVID cases, particularly in areas where vaccination rates are low; rising inflation, largely due to a spike in energy prices; and supply-chain disruptions affecting a wide range of sectors," said European Economic Commissioner Paolo Gentiloni.