By RAF CASERT, Associated Press

BRUSSELS (AP) — The European Union is seeing its economic emergence from the unprecedented COVID-19 downturn hampered by coronavirus-induced staffing shortages, supply bottlenecks, rising energy prices soar and the resulting bouts of inflation.

In its winter 2022 forecast, the European Commission said on Thursday that while the economy rebounded from stunning losses at the height of the pandemic crisis, key challenges remain on the path to a sense of normalcy.

“As the pandemic is still ongoing, our immediate challenge is to keep the recovery on track,” said European Commission Vice President Valdis Dombrovskis.

After the 27-nation bloc experienced a huge economic recovery for much of last year, growth is expected to have slowed again to 0.4% in the final quarter of 2021, from 2.2% in the previous quarter.

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“Significantly rising inflation and energy prices, along with supply chain and labor market bottlenecks, are holding back growth,” Dombrovskis said.

Member countries, however, are working hard to smooth out those wrinkles, and Dombrovskis said the economy is expected to pick up pace later in the year.

“We expect to get back into high gear later this year as some of these bottlenecks ease. EU fundamentals remain strong and will be further strengthened” as nations begin to inject funds of the EU’s pandemic recovery fund into their economies, Dombrovskis said.

After the EU economy contracted by 5.9% in 2020, when the pandemic hit Europe, the latest projections indicate that it grew by 5.3% last year and is expected to reach 4% this year, before falling back to 2.8% in 2023.

High unemployment has long blighted the EU, but now it can’t find enough people to put to work as the pandemic has sent many into quarantine and caused long-lasting illnesses. The highly contagious omicron variant has also led many member states to impose new restrictions which have affected consumer spending.

The EU needs more energy sources to boost its rebound but has been faced with soaring natural gas prices as supplies have dwindled for a number of reasons including a cold winter last year and Russia which held back sales in the short term. In the EU, it is believed to be an economic ploy to exert geopolitical advantage in the standoff with the West over Ukraine. But Russia claims to have fulfilled its long-term contracts.

The economy has also been hit by other shortages.

“The supply conditions have further deteriorated this winter. Shortages of raw materials and equipment continue to limit industrial production,” the report said.

Most notably, a shortage of computer chips has slowed car production in Europe, where consumers can wait up to a year for cars to be delivered.

To counter this, the EU on Tuesday announced a $48 billion plan to become a major semiconductor producer, seeking to reduce its reliance on Asian markets for the component that powers everything from cars to computers. hospital ventilators and game consoles.

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