BRUSSELS – The eurozone economy will plunge at least 8.7% in 2020 due to the COVID-19 lockdown, the European Commission said on Tuesday in more pessimistic forecasts that do not see a complete rebound next year.
The new forecasts see the eurozone economy bouncing back by 6.1% in 2021, still leaving the region worse off than before the countries were forced to implement lockdowns in an attempt to contain the spread of COVID-19, AFP reported.
“The economic impact of the lockdown is more severe than we initially expected,” stated Commission Vice President Valdis Dombrovskis in a statement accompanying the release of the updated forecasts.
“Looking forward to this year and next, we can expect a rebound but we will need to be vigilant about the differing pace of the recovery,” he added.
Forecasts are far more pessimistic than projections released earlier this year, in the middle of the pandemic slowdown.
The forecast predicts a 6% dip in Malta’s economy this year, with only Poland, Denmark and Sweden faring better. Germany, the EU’s biggest economy, is expected to see a 6.3% contraction this year and a 5.3% growth in 2021. The economies of France, Italy and Spain will each contract by more than 10 percent, and then partially recover.
France, the eurozone’s second-largest economy, is expected to contract by 10.6% this year and grow by 7.6% in 2021. Italy, which should suffer an 11.2% drop this year, is only forecast to rebound by 6.1% in 2021. Spain’s economy is seen as contracting by 10.9% before bouncing back by 7.1%.
“The policy response across Europe has helped to cushion the blow for our citizens, yet this remains a story of increasing divergence, inequality and insecurity,” said the EU’s economy commissioner, Paolo Gentiloni.
“This is why it is so important to reach a swift agreement on the recovery plan proposed by the Commission – to inject both new confidence and new financing into our economies at this critical time,” he added.