The European Union, on the verge of a recession of historic proportions

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The COVID-19 pandemic already left its mark on the European Union, driving it into a “deep and uneven recession”, forcing several national economies to contract, following the disruptions in work, daily life, as well as the movement of goods, says a report from the European Commission, released this Wednesday.

A worse forecast, compared to 2009

The EU economy is expected to shrink by 7.5% through this year, which is far worse than the results of the 2009 economic crisis, which led to a contraction of around 4.5%.

According to the forecast issued today, the economy in the EU “will experience a recession of historic proportions this year”, following weeks of economic shutdowns, but also social restrictions, caused by the COVID-19 pandemic.

European Commissioner for the Economy Paolo Gentiloni believes that the entire set of measures taken across the continent, combined with people’s fears of being infected, managed to loop off almost a third of the continent’s economic activity “practically overnight”.

EU to start recovering until 2021

Comparing the current situation with last fall’s forecast, a turnaround of 9 percent can be observed. Yes, a rebound should happen next year, but this doesn’t mean that Europe will be able to recover quickly.

“In 2021 we expect a rebound of 6.1% in the EU and 6.3% in the euro area – not enough to fully make up for this year’s loss,” Paolo Gentiloni said during the release of the forecast.

The report focuses on some of the hard-hit countries, like Italy, Spain, or France, as each of them registered gross domestic product metric drops of more than 8% this year. Germany, a country otherwise praised for the way it managed the coronavirus crisis, was affected as well, with a GDP expected to shrink by 6.5% this year.

Finally, the forecast predicts less severe drops for countries with smaller economies, like Poland or Austria, the impact of the pandemic will, most likely, have a greater impact on the EU’s economy than the Great Recession, which was started by a financial crisis.

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