The European Commission issued a sharply increased growth forecast on Wednesday, predicting that the euro zone economies will expand by 4.8 percent this year. 

Brussels had been expecting a 4.3-percent growth rate as the single-currency area recovers from the effects of the coronavirus pandemic and associated lockdowns.  

The new growth forecast for the euro zone now matches that for the 27-nation European Union as a whole, and both are now expected to grow at 4.5 percent in 2022.  

Last year's 6.5-percent drop in euro zone output, -6.0 percent in the EU as a whole, was a record fall, and now the recovery looks on course for a record climb.     

"Growth is expected to strengthen due to several factors," the European Commission statement said. First, activity in the first quarter of the year exceeded expectations.  

"Second, an effective virus containment strategy and progress with vaccinations led to falling numbers of new infections and hospitalizations, which in turn allowed EU member states to reopen their economies." 

The commission also revised its inflation forecast upwards.  

It now expects a rate of 1.9 percent in 2021 and 1.4 percent in 2022 in the euro area.  

In the EU, consumer prices are expected to rise slightly faster, by 2.2 percent this year – up 0.3 percentage points compared with the spring estimate – and by 1.6 percent next year. 

But the commission did not express concern, adding: "In 2022, these pressures should moderate gradually as production constraints are resolved and supply and demand converge."