The European Commission (EC) expects the eurozone’s gross domestic product (GDP) to fall 7.7% during 2020 due to the coronavirus pandemic, while in the whole of the European Union (EU) it anticipates a decrease of 7, 4%, according to the spring macroeconomic forecasts published this Wednesday.RELATED
Despite the sharp drop this year, Brussels estimates that the economy in the single currency area will grow 6.3% again in 2021, while GDP in the Twenty-Seven would advance 6.1%.
The EC stated in a statement that the COVID-19 pandemic represents a “great shock” for the global economy and the EU “with very serious socio-economic consequences” and added that despite the “rapid and exhaustive” political response in At Community and national levels, the European Union will experience “a recession of historic proportions” in 2020.
The Commission assured that the fall of 7.7% in the 19 euro countries represents a “record” drop in GDP.
The Community Executive stressed that the “blow” to the Union economy is symmetrical because the pandemic has affected all Member States, but stressed that the fall in GDP in the current year (since the 4.3% drop in Poland to 9.7% in Greece, the largest of all EU countries) and the strength of the recovery in 2021 will be different in each territory.
In fact, he indicated that recovery will depend on the evolution of the pandemic in each country, but also on the structure of their economies and the national capacity for political response.
“Europe is experiencing an unprecedented economic impact since the Great Depression. The depth of the recession and the strength of the recovery will be uneven and conditioned by the speed at which confinements can be lifted, the importance of services such as tourism in each economy and the financial resources of each country, “declared the European Commissioner for the Economy, Paolo Gentiloni.
Along with the fall in GDP, Brussels also expects the unemployment rate to grow in the eurozone from 7.5% in 2019 to 9.6% this year, although it will drop to 8.6% in 2021. In the 27 , will go from 6.7% recorded in 2019 to 9% in 2020, to stand at 7.9% a year later.
The EC warned that some member states will see “more significant” increases in unemployment than others, and considered that countries where there are large numbers of workers with temporary contracts or depend on tourism are “particularly vulnerable”.
Beyond unemployment, the Community Executive also contemplates that the public debt and deficits grow after the support measures for companies and workers approved by the governments of the Member States, which represent an increase in public spending.
Thus, the public deficit in the euro countries will go from 0.6% of GDP in 2019 to 8.5% this year, although it will fall to 3.5% in 2021. Across the EU it will go from 0.6% for the year prior to 8.3% in 2020 and 3.6% in 2021.
As for the public debt of the eurozone, it will grow from 86% of the GDP detected in 2019 to 102.7% this year, although in the following it will drop to 98.8%. In the Twenty-seven it will go from 79.4% in 2019, to 95.1% in 2020 and 92% in 2021.
Inflation will fall to 0.2% in the common currency partners this year and to 0.6% across the EU.