EU leaders pave way for implementation of landmark recovery package. Image Source: IANS News

Brussels, May 13 : The economy of the 27-member European Union (EU) will grow by 4.2 per cent in 2021 and 4.4 per cent in 2022, higher than previous estimates, the European Commission said in its Spring Forecast.

The higher economic forecasts come as the vaccination rollout speeds up across the EU, resulting in a more ambitious easing of restrictions on business operations, Xinhua news agency quoted the Commission as saying on Wednesday.

The rebound in Europe's economy that began last summer stalled in the fourth quarter of 2020 and in the first quarter of 2021, but "the EU and euro area economies are expected to rebound strongly as vaccination rates increase and restrictions are eased", it said.

The resumed growth will be driven by private consumption, investment and a rising demand for EU exports from a strengthening global economy, it added.

A forecast by the Commission made in February had projected that the EU economy would grow by 3.7 per cent in 2021 and 3.9 per cent in 2022.

The Covid-19 pandemic has dealt a historic blow to the bloc, with its economy contracting by 6.1 per cent in 2020.

"Recovery is no longer a mirage: it is underway. We must avoid mistakes that could undermine it: namely, a premature withdrawal of policy support," European Commissioner for Economy Paolo Gentiloni told a press conference.

"The quality, strength and duration of the recovery could still be influenced by the pandemic, but our economic fate is primarily in our own hands. And that is why we need to roll up our sleeves," he said.

Gentiloni said the faster pace of vaccinations in recent months should allow restrictions to be eased further in the second half of the year, and "for the first time since the pandemic hit, we see some optimism prevailing over uncertainty".

Noting that "the EU economy is set to grow robustly this year and next," he cautioned that "the risk of scarring, with a worsening of poverty, social exclusion and inequality, is very real".

Gentiloni said that the massive recovery package would help the EU recover to its pre-crisis level in the fourth quarter of 2021, and the eurozone would reach that point in the first quarter of 2022.

Out of the major EU economies, Spain and France, which were particularly hard hit in 2020, will have the highest growth rates in 2021, both approaching 6 per cent, according to the Commission's estimates.

Growth will be more modest in Germany at 3.4 per cent, and the Netherlands at 2.3 per cent, as they were slightly less affected last year.

The Spring Forecast also released predictions for some other European countries.

It noted that Romania's economy will grow by 5.1 per cent in 2021 and 4.9 per cent in 2022, both improved from previous estimates in February of 3.8 per cent and 4 per cent, respectively.

Cyprus' economy is expected to record a 3.1 per cent growth in 2021, compared with a previous forecast of 3.2 per cent growth, it said.

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