By Jan Strupczewski

BRUSSELS (Reuters) – The euro zone will rebound from its COVID-19 slump more than expected, the European Commission said on Wednesday, but some countries won’t reach pre-crisis levels before the end of 2022 — an argument for continued suspension of EU borrowing limits.

The aggregate growth of the 19 countries sharing the euro currency should be 4.3% this year and 4.4% in 2022, the European Union’s executive arm said, revising upwards its forecast from February of 3.8% growth in both years.

“The EU and euro area economies are expected to rebound strongly as vaccination rates increase and restrictions are eased. This growth will be driven by private consumption, investment, and a rising demand for EU exports from a strengthening global economy,” it said.

The forecast brings the Commission closer to the International Monetary Fund, which last month said it expected 4.4% growth in the euro zone this year.

“Growth rates will continue to vary across the EU, but all Member States should see their economies return to pre-crisis levels by the end of 2022,” the Commission said.

The need to return to pre-crisis levels has been an argument for the suspension of EU borrowing limits for governments in 2020 and 2021 and the Commission said in March that while its final decision would depend on the May forecasts, the EU should keep the limits suspended in 2022 to help economies rebound.

Government borrowing to keep economics alive during pandemic lockdowns will boost euro zone public debt to 102.4% of GDP this year from 100% in 2020. It will only edge lower to 100.8% in 2022, the Commission forecast.

The aggregate euro zone budget deficit is to balloon to 8% of GDP this year before halving to 3.% in 2022.

“Unprecedented fiscal support has been, and remains, essential in helping Europe’s workers and companies to weather the storm,” EU Economic Commissioner Paolo Gentiloni said.

Inflation, which the ECB has struggled for years to bring closer to its target of below, but close to 2%, should accelerate to 1.7% in 2021 and slow down to 1.3% in 2021.

The EU’s recovery effort financed through joint borrowing will boost public investment, as a proportion of GDP, to its highest level in more than a decade in 2022, the Commission said.

(Reporting by Jan Strupczewski)