European economy collapses by 7.8 percent. The second wave of infections is causing economic growth in the eurozone to slow down. For 2020, Brussels expects a total slump of 7.8 percent – an unprecedented recession, but better than assumed in the summer.
European economy collapses by 7.8 percent
The second wave of infections is causing economic growth in the eurozone to slow down. For 2020, Brussels expects a total slump of 7.8 percent – an unprecedented recession, but better than assumed in the summer. “Production in both the euro area and the EU is not expected to return to pre-pandemic levels in 2022,” the Commission said.
For the coming year, 4.2 percent growth is forecast for the 19 countries in the euro zone and 4.1 percent for the EU-27, and three percent for each of 2022. The pre-crisis level will not be reached again in the year after next, it said.
The new forecast figures for 2020 continue to point to an unprecedented recession, but are still slightly better than in summer. In July, the Brussels authority forecast that economic output in the euro zone would shrink by 8.7 percent and in the EU as a whole by 8.3 percent. After a sharp slump due to the pandemic lockdown in the second quarter, the economy grew by more than 12 percent in the third quarter, both in the euro zone and in the EU.
Now the commission is pointing to new risks due to the second corona wave and the associated new pandemic requirements. “After the deepest recession in the history of the EU and a very strong upturn in the summer, Europe’s economic recovery has been interrupted because of the higher number of Covid-19 cases,” said Economic Commissioner Paolo Gentiloni. “Growth will return in 2021, but it will be two years before the European economy can get roughly back to pre-pandemic levels.”
Top debt rider Greece
The debt ratio of the EU countries is expected to jump from 79.2 percent to 93.9 percent of economic output this year due to the crisis. For the 19 countries in the euro zone, Brussels is even assuming that it will exceed 100 percent of economic output. The front runner here is Greece with 207 percent. Italy, Portugal, Spain, Belgium, France and Cyprus are also well above 100 percent.
According to the forecast, an economic slump of 5.6 percent is to be expected for Germany this year. For 2021, the commission expects growth of 3.5 percent. In its summer forecast, the Federal Republic of Germany’s authorities had confirmed the prospect of an economic upswing of 5.3 percent next year.