The European Commission has turned more negative on its prospects for the euro zone’s economy, projecting a lower growth rate for the region in 2021 as governments grapple with new variants of coronavirus.

The Brussels-based institution expects the 19-member region to grow by 3.8% this year. In November, it had forecast a 4.2% GDP (gross domestic product) rate for 2021.

The latest forecasts come at a tricky time for the European Union as its Covid vaccine rollout faces issues around production, supply and red tape. At the same time, European governments are concerned about mutations of the virus that are deemed more contagious. The longer the health emergency drags, the longer EU countries have to extend social restrictions and lockdowns, which takes their toll on the economy.

Speaking to CNBC Thursday, the European Commissioner for Economic Affairs Paolo Gentiloni said: “We are still in a challenging winter with lockdowns an restrictive measures going on all over Europe.”