EU private consumption, investment and exports will rebound strongly this year and next, thanks to a combination of accelerated COVID-19 vaccination, a gradual easing of restrictions on the epidemic and economic stimulus measures, the European Commission said in its spring economic forecast. At the same time, the European Union remains wary of uncertainties such as a big increase in public debt.
Economy expected to rebound
Affected by the epidemic, the EU economy will shrink by 6.1% in 2020. At present, the smooth vaccination of the new coronavirus vaccine in the EU countries has strengthened the confidence of all parties in the economic rebound of the EU. The European Union (EU) is expected to grow by 4.2 percent this year and 4.4 percent next year, both higher than the forecast in February, according to a report released by the European Commission on Thursday.
Paolo Gentiloni, the European commissioner responsible for economic affairs, said the European Union’s economy was on track to return to pre-epidemic levels in the fourth quarter of this year, and the eurozone’s economy would recover in the first quarter of next year, thanks to massive stimulus measures.
Among the EU’s major economies, hard-hit Spain and France are both expected to grow close to 6 per cent this year, while Germany will grow 3.4 per cent, the commission forecast.
The EU’s economic recovery is closely related to the global economic recovery. Excluding the European Union, the European Commission forecast global growth of 5.9 per cent this year, slowing to 4.2 per cent next year.
The International Monetary Fund has also recently given an upbeat forecast for the global economy. In its World Economic Outlook released in April, the IMF predicted that the world economy would grow by 6% this year and 4.4% next.
Carsten Brzeski, chief economist of ING Germany, told Xinhua that barring any surprises, the EU’s economic forecast looks “very reasonable” and the overall situation is much stronger than a few months ago.
Power from the three engines
According to the Commission’s report, private consumption, investment and exports will drive the EU’s rapid economic recovery. The report predicts that private consumption will contribute 1.5 percentage points to EU growth this year, rising to 3 percentage points in 2022.
In Germany, for example, consumer spending is likely to surge as vaccination moves forward and restrictions are eased, fueling the country’s economic recovery, said Niels Janssen, a senior research fellow at the Kiel Institute for the World Economy. German industrial orders continue to grow, business investment will pick up quickly, and the outlook for sales will be less uncertain.
Meanwhile, thanks to the EU’s stimulus measures, public investment will rise to almost 3.5 per cent of EU gross domestic product next year.
In addition, the European Commission has high hopes for the global economic recovery to drive EU exports, which are expected to grow by 8.3% and 6.4% respectively in 2021 and 2022.
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Post time: May-18-2021