The EU's gross domestic product (GDP) is expected to grow by 3.7% in 2021 and 3.9% in 2022, according to the European Commission's winter economic forecast released Thursday.
In its regular economic forecasts for the 27-nation European Union and the 19 countries using the euro, the EU executive arm said the near-term outlook for the EU economy seems weaker than expected last fall, as the pandemic continues to weigh down the continent.
Pointing to more contagious variants of the coronavirus and newly introduced containment measures' negative impact on economic activity, it said the EU economy started 2021 on a weak footing.
However, it added, "as vaccination campaigns gain momentum and the pressure on health systems [starts] to subside, containment measures are set to relax gradually."
This will eventually, it predicted, lead growth to pick up, "still moderately in the second quarter, but more vigorously in the third, led by private consumption with additional support from global trade."
The economy is projected to see the pre-crisis level of output earlier than expected back in previous forecasts, largely because of the stronger momentum in the second half of 2021 and in 2022.
"The speed of the recovery will, however, vary significantly across the EU," it said, adding there are some EU economies that have contracted more than others during the pandemic.
Inflation expected to be slightly higher
According to the report, inflation in the EU is predicted to be slightly higher in 2021 compared to last fall, but to stay restrained albeit with a temporary improvement from base effects.
"In the euro area, inflation is forecast to increase from 0.3% in 2020 to 1.4% 2021 before moderating slightly to 1.3% in 2022."
It stated that all the projections are constrained by significant uncertainty and elevated risks, depending on the evolution of the pandemic and the success of vaccination campaigns.