The EU Commission is raising its growth forecast this year. For the next year, however, expectations for the Union are dampened. Delivery bottlenecks are also causing problems in Germany.
According to a forecast by the EU Commission, the economy in the European Union is recovering faster than expected.
However, growth could be dampened by a new wave of corona infections, high energy prices and ongoing supply chain bottlenecks, as the Brussels authority announced on Thursday. The German growth forecast for this year has been revised downwards significantly.
The commission raised its growth forecast for the entire EU for this year to 5.0 percent, in the summer forecast it was 4.8 percent. For next year, however, the authority is only assuming 4.3 percent – after the plus of 4.5 percent predicted in the summer.
“The European economy is moving from recovery to expansion, but is now feeling headwinds,” said Economic Commissioner Paolo Gentiloni. You have to be careful that this headwind does not take the recovery off course.
Among other things, bottlenecks and disruptions in the supply chains of international trade could affect economic performance, the commission wrote. In addition, the rapidly increasing energy prices could have an impact on investment and consumption. These have also contributed to the current high inflation, according to the forecast. The commission estimated that inflation will peak at 2.6 percent this year and then fall again to 2.5 percent the next and 1.6 percent the year after that.
According to the assessment, Germany will see economic output (GDP) growth of only 2.7 percent this year. The last forecast was based on 3.6 percent growth this year. Delivery bottlenecks have slowed the industry and thus blocked exports and investments, said Gentiloni. The commission estimated that there would be an increase of 4.6 percent next year.
Overall, the economic upturn in the EU is dependent on the development of the pandemic. “The improved health situation, through which the economic recovery was possible, is now threatened by increasing infections across the Union,” said Gentiloni. New corona measures could have a negative impact on the economy. According to the prognosis, this is an additional risk, especially in countries with a low vaccination rate.
Source From: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
