The European Commission estimates that the eurozone economy will experience a record 7.7% contraction of Gross Domestic Product this year, as a result of the covid-19 pandemic, recovering only partially in 2021, with growth of 6.3 %.

As was already expected, in these Spring Economic Forecasts released this Wednesday, the first to take into account the impact of the crisis caused by the pandemic, the community executive revised his previous growth projections by about nine percentage points. And he pointed out that, "despite the rapid and comprehensive response, both at European and national level, the European economy will experience a recession of historic proportions this year".

In the previous macroeconomic forecast exercise last February - when the new coronavirus still seemed confined to China -, Brussels anticipated the eurozone to grow 1.2% of GDP both this year and the next.

Three months later, the Commission estimates a contraction in the single currency area that is well above that seen at the height of the previous financial crisis - when the euro zone contracted 4.5% in 2009 - and even the recent forecast by the International Monetary Fund. (7.5%), and warns that "the risks surrounding this forecast are also exceptionally large and concentrated on the negative side".

As a consequence of the confinement caused by the covid-19 pandemic, which led to the shutdown of much of the European economy, Brussels also estimates that the unemployment rate will rise to 9.6% this year (from 7.5% in 2019) ), and falls only partially to 8.6% in 2021.

As a result of the robust budgetary measures adopted by the Member States to support the economy in the current crisis, the Community executive predicts, on the other hand, that the public deficit in the euro area will increase from 0.6% of GDP in 2019 to 8.5% in 2020 (falling to 3.5% in 2021), and that the public debt grows from 86% verified in 2019 to 102.7% this year, before slowing down to 98.8% next year.

Brussels stresses that, although the shock to the European economy is symmetrical, as it affects all Member States, both the contraction that will occur this year and the recovery that should take place next year affects countries in a "markedly different way" ", pointing out that the recovery will depend" not only on the evolution of the pandemic in each country, but also on the structure of its economies and its capacity to respond with stabilizing policies ".

"Given the interdependence of the EU economies, the recovery momentum in each Member State will also affect the strength of the recovery of other Member States", points out the Community executive, who for all 27 Member States of the Union anticipates a contraction 7.4% of GDP.

The Commission fears that even at the end of 2021 the European economy has not yet fully recovered from this year's losses, estimating growth in the euro area of ​​6.3%, as investment is expected to remain moderate and the labor market will not has fully recovered. And he warns that the picture may be even darker.

"A more serious and more lasting pandemic than that currently foreseen could cause a GDP decline much greater than anticipated in the baseline scenario of this forecast. In the absence of a strong and timely relaunch strategy at EU level, there is a risk that the crisis could lead to serious distortions in the single market and to deep-rooted economic, financial and social divergences between euro area Member States ", warns the Commission.

Brussels points out that "there is also a risk that the pandemic could trigger more drastic and permanent changes in attitudes towards global value chains and international cooperation, which would weigh on the highly open and interconnected European economy", in addition " also leave permanent scars due to bankruptcies and lasting damage to the job market ".

"At this stage, we can only provisionally trace the scale and severity of the coronavirus shock in our economies. Although the immediate consequences are much more serious for the world economy than the financial crisis, the depth of the impact will depend on the evolution of the pandemic, the our ability to safely relaunch economic activity and recover later, "said, in a first comment to these forecasts, Executive Vice President of the Commission Valdis Dombrovskis.