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EU Commission raises 2021 euro zone growth forecast, sees strong 2022 -Breaking

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© Reuters. FILE PHOTO – A commuter train travels by Frankfurt’s skyline and its financial district in advance of the European Central Bank (ECB?) governing council meeting that will take place later this week, on October 25th, 2021, Frankfurt. REUTERS/Kai Pfaffenbach

BRUSSELS. (Reuters). The Euro zone’s economy is expected to grow at a faster pace than anticipated this year, as it bounces back from the recession caused by the pandemic. In 2022, its growth will be strong with public debt and deficits falling.

After a 6.4% decline in 2020, the Commission forecast that the gross domestic product of the 19 euro-member countries would rise 5.0% in 2015, after an increase in unemployment to 6.4%. The Commission predicted growth of 4.3%-2022 and 2.4%-2023. In May 2021, it forecast growth of 4.3%.

Valdis Dombrovskis, Vice President of European Commission Valdis Dombrovskis stated that “our measures to mitigate the impact of pandemics and increase vaccinations throughout the EU clearly contributed to this success.”

Inflation would rise to 2.4% by 2021 from 0.3% in 2020 according to the Commission. It then will slow down at 2.2% in 2022 as well as 1.4 in 2023 according to the Commission. This year’s peak price rises will occur in the fourth quarter of 2018, and slow down gradually through 2022.

According to the Commission, rapid growth combined with gradual withdrawals of emergency government assistance for the economy will reduce the overall budget deficit in the euro area to 7.1% this year. This is down from 7.2% in 2020. Then it will drop to 3.9% and then 2.4% respectively in 2022.

This year’s peak of public debt at 100% is forecast for this year. The total amount will drop to 97.9% and 97.0% respectively in 2022-2023. That is a quicker fall than the May prediction.

Three key risks to the positive outlook are: an increased number of COVID cases in areas with low vaccination rates; increasing inflation, caused mainly by a rise in energy prices; supply chain

“Disruptions that are weighing down on many sectors”, said Paolo Gentiloni, European Economic Commissioner.

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