More than a year after the outbreak of the viral pandemic that is affecting the world, the European Commission has revised its forecasts for 2020 for the best, predicting a “strong rebound” in economic activity in the wake of carpet vaccinations and an abolition of restrictions on displacements. The Italian economy is also expected to recover sustainably, but more slowly than the EU average. On the inflation front, Brussels remains optimistic.
The real turning point in 2022
«The Recovery Fund will help the recovery and will bring about a real turning point in 2022, when it will cause an increase in public investment to the highest level in over a decade – said the vice-president of the European Commission Valdis Dombrovskis -. Many risks will continue to loom for as long as the viral pandemic lasts. Until we are on solid ground, we will continue to do whatever it takes to protect people and keep businesses afloat ”.
Loading…
Economic affairs commissioner Paolo Gentiloni added: «Unprecedented budget support has been – and remains – essential to help workers and businesses weather the storm. The corresponding increase in the deficit and debt is set to peak this year before starting to decline. We have a lot of work ahead of us – in Brussels and in the national capitals – to make the most of the historic opportunity of the NextGeneration EU ».
EU growth forecasts
In a nutshell, here are the main predictions of the community executive. The euro area is expected to grow by 4.3% in 2021 and 4.4% in 2022 (the autumn estimates were 4.2 and 3.0% respectively). In 2020, the contraction of the economy in the monetary union was 6.6%. In the Union, growth is expected to be 4.2% this year and 4.4% in 2022. Brussels remains confident about inflation: in the euro area it should be 1.7% in 2021 and by 1. , 3% per annum in 2022.
However, the Commission sees risks: «The estimates could underestimate the propensity of households to spend or instead underestimate the desire of consumers to maintain high levels of precautionary savings. Another factor is the timing of the withdrawal of budget support, which if premature could jeopardize the recovery. On the other hand, a delayed withdrawal over time could lead to market distortions, artificially keeping unprofitable companies alive ».