In its quarterly update on the EU’s economy, the commission on Thursday continued upgrading its outlook. It had previously revised its 2021 forecast of 4.8% GDP growth, published in July last year, to 5.8% in data .

“GDP is estimated to have strongly rebounded by around 7% in 2021, following a relatively limited decline of 1.8% in 2020,” the commission said in a statement on 10 February. “This strong growth is mainly driven by private consumption, which grew above its pre-crisis level in the third quarter of 2021.”

For 2022, the EU’s executive expects a growth of 3.9%--up from its earlier 3.7% forecast--and 2.9% for next year, up from 2.7%.

The energy crisis, however, has fuelled inflation with a zero inflation rate in 2020 increasing last year to rise to 3.5%, the commission said, revising its last 3.2% estimate.

While the commission in November had expected inflation growth to fall to 2.2% this year, it now says it could reach as much as 3.8% but expects it to drop to 1.5% next year.

The winter economic forecast is an interim outlook, which does not feature information on employment. This is only included in the comprehensive spring and autumn forecasts. The spring forecast is due to be published in May.

Across the EU, the commission expects slimmer growth compared to the grand duchy--5.3% for 2021, 4% this year and 2.8% in 2023. “The EU as a whole reached its pre-pandemic level of GDP in the third quarter of 2021 and all member states are projected to have passed this milestone by the end of 2022,” the forecast said.