Forecasts corrected upwards: EU economy on the verge of a strong comeback

After the unprecedented Corona slump in the global economy, EU Economic Commissioner Gentiloni is optimistic about the future. But the expanding delta variant could destroy the upswing.

The corona situation has eased, the vaccinations are progressing, the restrictions are gradually being relaxed. Shops, hotels and restaurants are opening again and tourism is picking up momentum. The economy throughout the European Union benefits from this. The gradual opening enables a “strong comeback”, says EU Economic Commissioner Paolo Gentiloni.

“That is why the EU Commission is correcting its forecast upwards and is now expecting growth of 4.8 percent this year, and 4.5 percent next year,” said Gentiloni. “So things are looking up again, and much faster than expected.” The labor market is also recovering. More and more employees switched from short-time work back to full-time.

Private consumption drives growth

According to the Commission, the main drivers of growth in the next few months will be private consumption and investment – also because many consumers postponed purchases during the lockdown and thus saved money that they can now spend. Without the current supply bottlenecks for computer chips, the upswing would be even better. The auto industry in particular complains about a lack of supplies.

The EU Commission expects the strongest upswing in Ireland, Hungary, Romania, Greece and Spain. With an estimated growth rate of 3.6 percent this year and 4.6 percent next year, Germany is in line with the European average.

Delta variant could endanger the upswing

“That is a little higher than we assumed in the spring because the health situation has improved and confidence in the economic situation has increased,” says Gentiloni. “The increasing incoming orders in the manufacturing industry and in the construction sector will also ensure growth in the coming months.”

In addition to a lot of light, the Commission also sees a whole range of risks. For example the rising oil price or higher cost of living. Above all, however, the rapid spread of virus mutations such as the Delta variant, against which just one vaccine dose does not seem to provide comprehensive protection. In the opinion of the Brussels authority, this underlines once again the importance of the vaccination campaigns. Or, as it literally says in the economic report: “The race between infections and injections continues.”