The European Commission said in an economic forecast that despite a policy response at both the European Union (EU) and national level, the EU economy will experience a recession of historic proportions this year due to the coronavirus pandemic.
It projects that the euro area economy will contract by a record 7.75 percent in 2020 and grow by 6.25 percent in 2021. The EU economy is forecast to contract by 7.5 percent in 2020 and grow by around 6 percent in 2021.
As the pandemic has hit all EU member states, the economic shock will be symmetric, but on different levels. The sharpest decline in economic output is 9.75 percent in Greece, and Poland is expected to fare the best -- contract by only 4.25 percent, according to the forecast.
The unemployment rate in the euro area is forecast to rise from 7.5 percent in 2019 to 9.5 percent in 2020 before declining again to 8.5 percent in 2021. In the EU, the unemployment rate is forecast to rise from 6.7 percent in 2019 to 9 percent in 2020 and then fall to around 8 percent in 2021.
Consumer prices are expected to fall significantly due to the drop in demand and the steep fall in oil prices, which together should more than offset isolated price increases caused by pandemic-related supply disruption, according to the forecast.
Inflation in the euro area is now forecast at 0.2 percent in 2020 and 1.1 percent in 2021. For the EU, inflation is forecast at 0.6 percent in 2020 and 1.3 percent in 2021.
"Europe is experiencing an economic shock without precedent since the Great Depression," European Commissioner for the Economy Paolo Gentiloni said.
