EU: Spring 2020 Economic Forecast

By: Nina Hoppmann
Created: 6 May 2020 - 09:05
Updated: 6 May 2020 - 09:05

The Spring 2020 Economic Forecast of the European Union projects that the euro area economy will contract by a record 7.75 % in 2020 and grow by 6.25 % in 2021. The EU economy is forecast to contract by 7.5 % in 2020 and grow by around 6% in 2021.

The shock to the EU economy is symmetric in that the pandemic has hit all Member States, but both the drop in output in 2020 (from -4.25 % in Poland to -9.75 % in Greece) and the strength of the rebound in 2021 are set to differ markedly. Each Member State's economic recovery will depend not only on the evolution of the pandemic in that country, but also on the structure of their economies and their capacity to respond with stabilising policies. Given the interdependence of EU economies, the dynamics of the recovery in each Member State will also affect the strength of the recovery of other Member States.  

While short-time work schemes, wage subsidies and support for businesses should help to limit job losses, the coronavirus pandemic will have a severe impact on the labour market. The unemployment rate in the euro area is forecast to rise from 7.5 % in 2019 to 9.5 % in 2020 before declining again to 8.5 % in 2021. In the EU, the unemployment rate is forecast to rise from 6.7 % in 2019 to 9 % in 2020 and then fall to around 8 % in 2021.

Source: European Commission