EU Commission raises 2021 euro zone growth forecast, sees strong 2022

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FILE PHOTO: A commuter train passes the skyline along its financial district ahead of the European Central Bank (ECB) Governing Council meeting this weekend in Frankfurt, Germany, October 25, 2021. Businesshala/Kai Pfaffenbach
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BRUSSELS (Businesshala) – The euro area economy will grow faster this year than previously expected as it recovers from the pandemic-induced recession and continues to expand strongly in 2022, with deficits and public debt plunging, the European Commission said on Thursday. forecasted.

The commission said GDP in the 19 euro-sharing countries would grow 5.0% this year after a 6.4% slowdown in 2020. It projected growth of 4.3% in 2022 and 2.4% in 2023. The forecast for May 2021 growth was only 4.3%.

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Valdis Dombrowski, Vice President of the European Commission, said: “Our measures to reduce the impact of the pandemic and promote vaccination in the EU have clearly contributed to this success.”

The commission said inflation will reach 2.4% in 2021, rising from 0.3% in 2020 to 2.2% in 2022 and 1.4 in 2023. The increase in prices is to take place in the last four months of this year, and then gradually in the slow 2022.

Rapid growth and a gradual withdrawal of emergency government support for the economy will help reduce the euro area’s gross budget deficit to 7.1% of GDP this year, from 7.2% in 2020 and then 3.9% in 2022. and will be 2.4% in 2023. Commission forecast.

The public debt, which has peaked this year at 100% of GDP for the euro area, is set to fall to 97.9% in 2022 and 97.0% in 2023 – a sharper reduction than forecast in May.

“There are three major threats to this positive picture: a significant increase in COVID cases, most acute in areas where vaccination is relatively low; Rising inflation, primarily driven by rising energy prices; and supply-chain

Disruptions that are weighing on many sectors,” said European Economic Commissioner Paolo Gentiloni.

Reporting by Jan Strupzewski

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