BRUSSELS: The European Union is seeing its economic emergence from the unprecedented COVID-19 slowdown hampered by coronavirus-induced staff shortages, supply bottlenecks, runaway energy prices and subsequent inflation surges.
In its winter 2022 forecast, the European Commission said Thursday that even though the economy has rebounded from the stunning losses at the height of the pandemic crisis, key challenges remain on the path to a sense of normalcy.
“As the pandemic is still ongoing, our immediate challenge is to keep the recovery well on track,” EU Commission Vice President Valdis Dombrovskis said.
After the 27-nation bloc enjoyed a huge economic turnaround for much of last year, growth is expected to have slowed again to 0.4 per cent in the last quarter of 2021, compared with 2.2 per cent in the previous quarter.
“ The significant rise in inflation and energy prices, along with supply chain and labour market bottlenecks, are holding back growth,” Dombrovskis said.
Member nations, however, are working hard to smooth out those wrinkles, and Dombrovskis said the economy should ramp up later in the year.
"We expect to switch back into high gear later this year as some of these bottlenecks ease. The EU’s fundamentals remain strong and will be boosted further" as nations will start to pump funds from the EU's pandemic recovery fund into their economies, Dombrovskis said.
After the EU economy shrank by 5.9 per cent in 2020, when the pandemic hit Europe, the latest projections are that it grew by 5.3 per cent last year and should reach 4 per cent this year, before sliding back to 2.8 per cent in 2023.
High unemployment blighted the EU for so long, but now it cannot find enough people to put to work because the pandemic has sent many into quarantine and caused long-term illness. The highly contagious omicron variant also forced many member states into new containment measures that hit consumer spending.