BRUSSELS (Reuters) – The euro zone should start showing signs of economic recovery in the first quarter of next year, although fresh lockdowns such as in Germany and the Netherlands show the area faces a difficult winter, the EU economy commissioner said on Wednesday.
Paolo Gentiloni, speaking after a meeting of euro zone finance ministers, said 2020 had been a “truly grim year”, with a European Commission forecast that the economy of the 19-country euro zone would contract by 7.8% this year, before 4.2% growth in 2021.
The commissioner commented that some euro zone countries, notably Germany and the Netherlands, had put in place new containment measures that would dampen domestic demand in the short-term
“Uncertainty is still there for the winter that is coming. All in all, we can expect to see the first green shoots of recovery in the first quarter next year, but this is still subject to high risk,” he told a news conference.
Gentiloni said the third quarter rebound had been higher than initially thought, but that prospects in the fourth quarter looked worse, even if the economic impact of second lockdowns were not as severe as those of the first.
News of the imminent arrival of vaccines had boosted expectations of a faster recovery, Gentiloni said, adding that if they were made available to all Europeans next year, then the economy could return swifter than expected to pre-pandemic levels.
Euro zone finance ministers agreed their fiscal policies should remain supportive throughout 2021 and agreed that they should be targeted and temporary in nature.
(Reporting by Philip Blenkinsop, Editing by William Maclean)