2021.02.1109:18:00UTC+00EU Cuts Eurozone 2021 GDP Growth Outlook

The near-term outlook for the euro area looks weaker than expected last autumn, as the pandemic tightened its grip on the region, the European Commission said in its interim Winter forecast, released Thursday.

The currency bloc is forecast to grow 3.8 percent this year, instead of 4.2 percent projected previously. Meanwhile, the outlook for 2022 was raised to 3.8 percent from 3 percent.

The European economy started the New Year on a weak footing, the EU noted.

Nonetheless, the breakthrough development of vaccines in the autumn and the start of mass vaccination campaigns brightened the outlook beyond the near term. Inflation in the euro area is expected to be slightly higher in 2021 compared to last autumn, but to remain subdued despite a temporary boost from base effects, EU said.

Inflation is seen at 1.4 percent in 2021, up from the prior forecast of 1.1 percent. The projection for 2022 was retained at 1.3 percent.