Paolo Gentiloni ruled Italy as Prime Minister at a time when economic growth was very weak. It was between 2016 and 2018 and the growth rates were between 1.6 and 0.9%. In his new role as EU Economic Commissioner, Gentiloni then lived from Brussels how his country experienced a historic crash during the Corona crisis. This Thursday, in his autumn forecast for the European Union, he presented figures that himself surprised him: the Italian economy will probably grow by 6.2% this year, his authority forecasts 4.3 % for the coming year, and this is still the case the following year 2.3 percent. “This kind of thing,” said Commissioner Gentiloni, “only happens once in a lifetime.”
It’s an exceptional situation in every relationship. Of course, the recovery in Italy is particularly strong because the previous downturn was so dramatic. The amounts mobilized by national governments in Europe after the suspension of the rules of the European Stability and Growth Pact are also unique. And the effect of the Corona Reconstruction Fund, from which the EU distributes 800 billion euros in Europe and whose effect Gentiloni has highly praised, is also unique. He probably would have liked such a glut of money sooner to revive the economy of southern Europe.
For Spain, Gentiloni has announced growth of 4.6% this year and 5.5% next year. The French economy will grow by up to 6.5% in 2021. The value for the EU as a whole is 5.0 percent, another small check from the previous forecast. Gentiloni said it was “an extraordinary achievement”, both from the EU and national governments.
There is also the “headwind” – like inflation
For Germany, the commission corrected its figures significantly downwards for 2021, to 2.7%. In the coming year, the German economy will grow parallel to that of the EU as a whole, by more than four percent, according to the Commission document. The main driver of development across Europe is domestic demand. However, Gentiloni warned of considerable “headwinds”. He continues to be concerned about the pandemic with the risk of further restrictions on public life. Blocked supply chains could continue to stifle growth, Gentiloni said. More importantly, the rise in energy prices threatened to fuel inflation and therefore slow down consumption and investment. The Commission estimates that inflation will peak at 2.6% this year, then drop to 2.5% next year and 1.6% the following year.