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BCN-07
VIRUS-EU-ECONOMY
EU forecasts ‘historic’ 7.7 percent eurozone recession
BRUSSELS, May 6, 2020 (BSS/AFP) – The European Commission said Wednesday the
eurozone economy would contract by a staggering 7.7 percent in 2020, as the
catastrophic consequences of the coronavirus outbreak sweep through the
continent.
Calling it a “recession of historic proportions”, the EU’s executive said
the 19-member single currency zone would rebound by 6.3 percent in 2021, but
in an uncertain recovery that would be felt unevenly across the continent.
That question is pressing, amid gripes by Italy and Spain that wealthier
Germany and the Netherlands have the means to swiftly turbocharge their own
recoveries, lessening their enthusiasm for measures to help the south.
The commission’s data seemed to confirm this concern, with Italy seeing a
cataclysmic recession of 9.5 percent in 2020, and only a 6.5 percent recovery
next year to make up the ground.
Greece’s recession would reach an eye-watering 9.7 percent, wiping out all
the gains of its post-bailout recovery, and only pull back by 7.9 percent in
2021, the commission said.
The recovery meanwhile would be much healthier in Germany’s economy,
Europe’s economic powerhouse, which was predicted to sink by 6.5 percent in
2020 and recover 5.9 percent in 2021.
The effects on public finances in heavily indebted Italy would be
particularly bad, with the annual deficit soaring to 11.1 percent of annual
output, and with Spain and France overspending by 10 percent.
The EU limit is normally three percent.
“Europe is facing an economic shock without precedent since the Great
Depression,” said European Economic Commissioner Paolo Gentiloni, referring to
the aftermath of the 1929 financial crash.
BSS/AFP/MMA/1550hrs