This month, the European Commission released the Winter 2021 Economic Forecast. It projects a growth rate for the EU economy of 3.7% in 2021 and 3.9% in 2022. The EU economy is expected to contract in the first quarter of 2021 and then grow in spring, as vaccinations are rolled out. However, there will be variation among Member States, with some reaching pre-pandemic economic output levels by the end of 2021 or early 2022, and others taking longer.

Inflation is expected to increase from 0.3% in 2020 to 1.4% in 2021. The forecast is characterised by uncertainty, much like the previous forecast released last November. While the vaccination process and the funds from the NextGenerationEU instrument could lead to better economic outcomes, the opposite could be true if the pandemic persists, if there are delays in vaccine roll-outs, or if bankruptcies and job losses are larger than envisioned.

The full forecast can be found here. The next forecast will be the Spring 2021 Economic Forecast, which will be released in May 2021.