The European Commission forecast on Tuesday that the EU economy will experience a “deep recession” this year due to the coronavirus pandemic, suffering an economic contraction “significantly greater” than the Commission’s earlier forecast.
“Because the lifting of lockdown measures is proceeding at a more gradual pace than assumed in our Spring Forecast, the impact on economic activity in 2020 will be more significant than anticipated,” said the Commission.
The Commission’s Summer 2020 Economic Forecast projects that the euro area economy will contract by 8.7% in 2020 and grow by 6.1% in 2021.
The whole EU economy is forecast to contract by 8.3% in 2020 and grow by 5.8% in 2021.
The contraction in 2020 is, therefore, projected to be significantly greater than the 7.7% projected for the euro area and 7.4% for the EU as a whole in the Commission’s Spring Forecast.
Growth in 2021 will also be “slightly less robust” than projected in the spring.
Paolo Gentiloni, Commissioner for the Economy, said: “Coronavirus has now claimed the lives of more than half a million people worldwide, a number still rising by the day – in some parts of the world at an alarming rate.
“And this forecast shows the devastating economic effects of that pandemic.
“The policy response across Europe has helped to cushion the blow for our citizens, yet this remains a story of increasing divergence, inequality and insecurity.
“This is why it is so important to reach a swift agreement on the recovery plan proposed by the Commission – to inject both new confidence and new financing into our economies at this critical time.”