EU GDP to return to pre-Covid levels by end 2021

The finance minister João Leão kicked off the Recovery Summit with an optimistic tone: he emphasised the recovery that is underway in the European Union and anticipated a rebound to pre-pandemic levels later this year. Previously, forecasts had pointed to 2022 as the year when the European average would fully recover, with differences between member states.

“The pandemic caused an economic crisis without parallel in our recent history,” the minister assumed at the beginning of his speech, noting that it was the “success of the immediate response to the crisis” by the European Union that allowed, for example, to keep the European labour market “relatively stable”. The unemployment rate has risen to levels “far removed from previous crises”. He also said that “the worst moment of the crisis is now behind us.”

For João Leão there will now be a “rapid recovery of the economy in the coming months”, envisaging that “pre-pandemic levels can be overcome in Europe by the end of the year”. This forecast is more optimistic than the latest from the European Commission, but next week Brussels will update its estimates, and an upward revision is expected.

However, the president of Ecofin warned that “this is not enough”. João Leão gave the example of the International Monetary Fund (IMF) forecast: despite the recovery, the European Union’s GDP will remain three percentage points (p.p.) below the level, it would have been without a pandemic.