The Eurozone’s most important economy, Germany, is turning more optimistic about economic recovery from the ongoing coronavirus crisis, and has upgraded its growth projections for the current year. The anticipated uptick in economic growth is powered by the pace of the COVID-19 vaccine rollout, which is finally catching up with its peers like the US and the UK.

The German government now expects its economy to grow at 3.5% this current year. Economy minister Peter Altmaier had previously stated, “There are reasons to be optimistic. In January, we forecast growth of 3.0 percent. Current data show that it will even be slightly higher.”

The coronavirus pandemic drove a deep contraction by 4.9% in the German economy through 2020, and although the nation is still suffering from the third wave of the pandemic, the vaccine distribution is picking up, offering hopes for a swift rebound in economic activity once lockdowns are eased. Economists have already forecast that the German economy could grow by 3.7% through 2021, a more optimistic estimate than that made by the government.

There is also greater hope that external demand could improve as Germany’s key trade partners have robust vaccine rollout programs fueling their recoveries. This in turn could drive up exports out of Germany and support its economic growth in the coming months.