The Spring 2021 Economic Forecast projects that the EU economy will expand by 4.2% in 2021 and by 4.4% in 2022. The euro area economy is forecast to grow by 4.3% this year and 4.4% next year. This represents a significant upgrade of the growth outlook compared to the Winter 2021 Economic Forecast which the Commission presented in February. Growth rates will continue to vary across the EU, but all Member States should see their economies return to pre-crisis levels by the end of 2022.
Malta’s economy should see a robust recovery in 2021 and 2022, provided that the tourism sector opens up safely. The recovery is expected to be driven by a rebound in tourism-related services exports, household consumption and investment. Given the supportive fiscal policy stance, the general government deficit is set to widen further in 2021 before improving in 2022 on the back of an accelerating recovery and a winding-down of fiscal support measures. Read more on page 98 here.
Members of the College said:
Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People said: “While we are not yet out of the woods, Europe's economic prospects are looking a lot brighter. As vaccination rates rise, restrictions ease and people's lives slowly return to normal, we have upgraded forecasts for the EU and euro area economies for this year and next. The Recovery and Resilience Facility will help the recovery and will be a real game changer in 2022, when it will ramp up public investments to the highest level in over a decade. Much hard work still lies ahead, and many risks will hang over us as long as the pandemic does. Until we reach solid ground, we will continue to do all it takes to protect people and keep businesses afloat.”
Paolo Gentiloni, Commissioner for Economy said: “The shadow of COVID-19 is beginning to lift from Europe's economy. After a weak start to the year, we project strong growth in both 2021 and 2022. Unprecedented fiscal support has been – and remains – essential in helping Europe's workers and companies to weather the storm. The corresponding increase in deficits and debt is set to peak this year before beginning to decline. The impact of NextGenerationEU will begin to be felt this year and next, but we have much hard work ahead – in Brussels and national capitals – to make the most of this historic opportunity. And of course, maintaining the now strong pace of vaccinations in the EU will be crucial – for the health of our citizens as well as our economies. So let's all roll up our sleeves.”
The Spring 2021 Economic Forecast is based on a set of technical assumptions concerning exchange rates, interest rates and commodity prices, with a cut-off date of 28 April 2021. For all other incoming data, including assumptions about government policies, this forecast takes into consideration information up until and including 30 April. Unless policies are credibly announced and specified in adequate detail, the projections assume no policy changes.
Following the final adoption of the RRF regulation and significant progress on the preparation of the recovery and resilience plans, the Spring Forecast incorporates the reform and investment measures set out in draft RRPs for all Member States. However, at the time of the cut-off date, details of some plans were still under discussion in a number of Member States. In such cases, simplified working assumptions have been used for the recording of RRF-related transactions, specifically regarding the time profile of expenditure (assumed to be linear over the RRF lifetime) and its composition (assumed to be split between public investment and capital transfers.)
For More Information
Full document: Spring 2021 Economic Forecast
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Follow Commissioner Gentiloni on Twitter: @PaoloGentiloni
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*Updated on 12-05-2021 at 11:00
- Publication date
- 12 May 2021