EU forecast falls

Bloc drops its 2021 economic expansion expectation from 6.1% to 4.2%

The European Commission has marked down its forecast for economic growth for ne xt year af ter countries in the region imposed a second round of lockdowns to stem a rebound in coronavirus infections.

The Autumn Economic F orecast released on T hursday predic ts growth of 4.2 percent in 2021 for the 19member eurozone, down from the 6. 1 percent projec ted in the summer forecast in early J uly. For 2020, it e xpects the econom y to shrink by 7 .8 percent, be tter than the 8.7 percent in the summer forecast.

“In recent weeks we are facing the resurgence of the pandemic and new containment measures ha ve been taken. The economic rebound has been interrupted, ” European Commissioner for Econom y P aolo Gentiloni said in a statement accompanying the new forecast.

He said growth is set to stall in the fourth quarter of the year but would pick up again in the first quar ter of 2021.

For the 27 member European Union, the econom y is forecast to contract by 7.4 percent before growing 4. 1 percent in 2021, compared with the summer projec tions of an 8.3 percent contraction in 2020 and growth of 5.8 percent next year.

The growth forecast for both the eurozone and the EU in 2022 is 3 percent.

Gentiloni, a former Italian prime minister, said the forecast implies that GDP for the EU as a whole will be just shy of its prepandemic level by the end of 2022.

But he noted that the pandemic is evolving by the da y, making an y forecast subject to high uncertainty. The World Health Organization has described the European region as the new epicenter of COVID19.

Encouraging report

The economic impact of COVID19 has dif fered widely across the EU and the same is true of recovery prospects, reflec ting the spread of the corona virus, the stringenc y of public health measures tak en, the sectoral composition of national economies and the streng th of national polic y responses, according to the report.

The autumn forecast came af ter an encouraging repor t last week that showed the eurozone grew 12.7 percent in the third quar ter of this year, after the first wave of the pandemic subsided.

The new forecast e xpects unemployment in the EU to continue to rise in 2021 as member states phase out emergenc y suppor t measures and ne w people enter the labor market. It e xpects the situation to improve in 2022 as the econom y recovers.

Unemployment in the eurozone is expected to rise from 7.5 percent in 2019 to 8. 3 percent in 2020 and 9.4 percent in 2021, before declining to 8. 9 percent in 2022. F or the EU, the jobless rate is forecast to increase from 6.7 percent in 2019 to 7.7 percent in 2020 and 8.6 percent in 2021. before declining to 8 percent in 2022.

The European Commission Executive Vicepresident for an Economy that W orks for P eople, Valdis Dombrovskis, said the bloc has shown resolve and solidarit y through the turbulence.

He highlighted that the EU agreed on a 1.8 trillioneuro ($2. 1 trillion) landmark recover y package, known as N extGenerationEU, to provide massive suppor t to the worsthit regions and sectors.

“I call again on the European Parliament and (European) Council to wrap up negotiations quickly for money to star t flowing in 2021 so that we can in vest, reform and rebuild together,” he said.

Separately, negotiators from the European Parliament and the European Council on T hursday reached a provisional deal which stipulates that member states that disrespec t the rule of law will risk losing access to EU funds.

The deal is still to be approved by the P arliament and the European Council. Poland and H ungary have clashed with the EU on issues relating to the rule of law.

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