EU sees eurozone economy crashing 8.7% in 2020

BRUSSELS, Belgium – The eurozone economy will plunge 8.7% in 2020 due to the coronavirus crisis, the European Commission said on Tuesday, July 7, in more pessimistic forecasts that do not see a complete rebound next year.

The new forecasts see the eurozone economy bouncing back by 6.1% in 2021, still leaving the region worse off than before the countries were forced to implement lockdowns in an attempt to contain the spread of COVID-19.

“The economic impact of the lockdown is more severe than we initially expected,” said Commission Vice President Valdis Dombrovskis in a statement accompanying the release of the updated forecasts.

“Looking forward to this year and next, we can expect a rebound but we will need to be vigilant about the differing pace of the recovery,” he added.

Germany, the European Union’s biggest economy, is expected to see a 6.3% contraction this year and 5.3% growth in 2021.

The economies of France, Italy, and Spain will each contract by more than 10%, and then partially recover. 

France, the eurozone’s 2nd largest economy, is expected to contract by 10.6% this year and grow by 7.6% in 2021.

Italy, which should suffer a 11.2% drop this year, is only forecast to rebound by 6.1% in 2021.

Spain’s economy is seen as contracting by 10.9% before bouncing back by 7.1%.

“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,” said the EU’s economy commissioner, Paolo Gentiloni.

“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,” he added. – Rappler.com