The EU economy is expected to grow by 5% in 2021, accompanied by a 2.6% rise in inflation due to growing energy prices, the European Commission announced on Thursday.

According to the EU executive body’s autumn economic forecast, the bloc’s economy has been recovering from the shock of the COVID-19 pandemic faster than expected.

The EU economy will expand by 5% this year and 4.3% in 2022, the prognosis suggested.

The highest growth rates are foreseen for Ireland, Estonia, and Croatia this year, with a GDP growth of 14%, 9%, and 8.1% respectively.

“The European economy is moving from recovery to expansion but is now facing some headwinds,” EU Commissioner for Economy Paolo Gentiloni commented on the forecast.

Gentiloni praised the bloc’s €750 billion ($860 billion) recovery fund that already helped the economy to rebound from the shock of the pandemic.

At the same time, he warned of three “key threats to this positive picture” -- the rise in new COVID-19 cases and low vaccination rate in some countries, the “rising inflation, driven largely by a spike in energy prices,” and supply-chain disruptions.

The inflation in the euro area is projected to peak at 2.4% this year, while the rise in prices will be slightly higher -- 2.6% -- in the entire bloc.

According to the forecast, energy prices will level out in 2022, so inflation in the eurozone and the EU will drop to 2.2% and 2.5%, respectively, next year./agencies