European Commission forecast: what will happen to the economy of the region’s states in 2021

March 2, 2021
European Commission economic forecast for EU and eurozone states
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The GDP of the EU states will grow by 3.7% by the end of 2021. The region’s economies will reach pre-crisis levels faster than previously thought. We tell you what the European Commission sees as the reason for the rapid economic recovery and what its forecast is for states with residence permit programmes by investment.
The European Commission forecasts the same GDP growth for the eurozone, a region of 19 states that use the euro as their main currency. The GDP of both regions will continue to grow in 2022.

2020 results and GDP growth forecast for the EU and the eurozone

The graph shows that the GDP of the EU and the Eurozone has declined in 2020. The reason is the coronavirus pandemic. Many companies had to close due to quarantine. And international tourism declined by 74% compared to the number of arrivals for 2019. These figures are cited by the UN World Tourism Organisation.

The European Commission points to three factors that allow the region’s economy to recover in 2021.

Mass vaccination against coronavirus. EU states have already started vaccinating residents. This means that the quarantine will soon be lifted and the borders will open. Tourism will resume, businesses will return to normal operations and the economy will begin to grow.

A new trade agreement between the EU and the UK. The EU economy is closely linked to the UK economy. Governments had to agree on new post-Brexit trade rules by 31 December 2020. Otherwise, British goods would have become subject to duties and prices would have risen when sold in the EU. But the agreement was signed on time, eliminating risks to the European economy in 2021.

Financial assistance to European Union countries. The regional government has set up a new Recovery and Resilience Facility. It allocates money to countries to support their economies and carry out anti-crisis reforms. For example, to subsidise businesses and save jobs.

The expected growth may not be there because risks remain for the economies. First of all, it is not known how the pandemic situation will develop. If it worsens, GDP will continue to fall. The crisis of 2020 may also have serious long-term consequences due to bankrupt businesses, unemployment and rising inequality in society.

The European Commission takes risks into account and therefore updates its economic forecast every three months. The current situation is described in the official report for February 2021 on the European Commission website.

Forecast for 2021 for EU states

Economic growth and recovery is proceeding at different speeds in different EU countries. States whose economies depend on tourism recover more slowly. For them, the distribution of vaccines and the opening of borders are decisive factors in the recovery.

The European Commission has drawn up a map of the region with GDP growth projections for the end of 2021. The biggest growth is forecast for France, Spain and Croatia – more than 5%. The smallest is in the Netherlands, where growth will be just 1.8%.

Economic forecast for countries with residence permits

Malta, Portugal and Greece are the most attractive countries for investment in 2021-2022. The European Commission predicts that the GDP of these countries will grow more than the regional average. Growth will accelerate in 2022.

GDP growth forecast for countries with a residence permit and permanent residence permit programmes

Country 2021 year 2022 year
Malta +4,5% +5,4%
Portugal +4,1% +4,3%
Greece +3,5% +5%
Cyprus +3,2% +3,1%
Austria +2% +5,1%

Malta had one of the worst results for 2020, with the economy contracting by 9%. The reason for this is limited air travel and a lack of tourists. Economic recovery also depends on how soon the country opens the border.

The Maltese central bank also predicts that the economy will grow significantly over the next two years: by 5% in 2021 and 5.5% in 2022.

Public opinion backs up analysts’ forecasts. 42% of Maltese are confident that the economic situation in the country will improve in 2021. By comparison, only 21% of EU citizens surveyed to hold a similarly positive view of economic development in the region.

A permanent residence permit in Malta is granted to wealthy cosmopolitans by investment from €112,000. To become a resident, the investor buys or rents a house on the island, pays an administrative fee and a government fee, and makes a donation to a local non-profit organisation. The applicant also confirms the existence of assets from €500,000.

Portugal is dependent on tourism: around 20% of the country’s GDP is made up of revenues from the tourism industry. The European Commission predicts that the economy will contract by 2.1% in the first three months of 2021. But in spring and summer, the figures will begin to pick up with the expected resumption of international tourism.

Residence permits in Portugal are granted for:
  • investments in real estate;
  • Opening a deposit in a local bank;
  • buying shares in venture capital funds;
  • funding of scientific research and cultural projects;
  • Contribution to an existing business;
  • setting up a new company headquartered in Portugal.

The minimum investment amount is €250,000 to finance cultural projects. But the most popular option is the purchase of real estate from €500,000 onwards.

Greece’s economy will largely recover through increased demand for goods domestically. The European Commission also noted the effectiveness of the state’s fiscal policy, which supports businesses and the population during the crisis. The gradual resumption of exports of goods and the opening of borders to tourists also contribute to economic growth in 2021.

A residence permit in Greece is granted for the purchase of real estate worth 250,000 € or more. Participants in the investment programme purchase accommodation or facilities for commercial use, rent hotels or tourist apartments for a minimum of 5 years and buy plots of land for construction.

Cyprus will show stable GDP growth in 2021 and 2022. The European Commission notes that the quarantine is having less of an impact on the country’s economy now than it did last spring. For example, the restrictions have not affected the pace of construction on the island. We talked about this in the article “Real estate in Cyprus continues to be built for participants in the Permanent Residence Programme“.

A permanent residence permit in Cyprus is granted if the investor buys one or more residential properties with a total value of €300,000 or more. Under the terms of the programme, only new accommodation may be purchased. Once a permanent residence permit has been granted, the property can be rented out.

Austria suffers winter losses when popular ski resorts are closed due to quarantine. The gradual lifting of restrictions and government support are the main factors for a gradual increase in GDP from spring 2021.

The Austrian residence permit for those who are financially independent is only issued on the basis of quotas – only 450 per year are available. In order to obtain the quota, you have to prepare the documents in advance. Therefore, preparations are already underway to apply in January 2022.

A residence permit in EU countries allows you to move to the country of residence, do business and study there. You can also travel freely to Schengen countries with a residence card or a residence permit.

Experts-analysts of investment programmes of Immigrant Invest recommend not postponing participation until the second half of 2021. It is better to invest now before the economy starts to grow and as a consequence, the prices of investment objects rise.

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Immigrant Invest is a licensed agent of European residence permit and permanent residence permit programmes. If you want to become a resident of an EU country, seek advice from experts in investment programmes.

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