Coronavirus : the EU awaits a historic recession in 2020

The european Commission expects a record loss of GDP of 7.7% in euro area up to 2020, and then on a rebound to 6.3% in 2021.

the health crisis to the economic crisis. The european Commission predicted on Wednesday that a recession "history" in the EU this year, hit hard by the pandemic of sars coronavirus and its implications on the economy. "Europe is facing an economic shock is unprecedented since the great depression [of 1929]," stressed the european Commissioner for Economics, the Italian Paolo Gentiloni.

The Commission expects a record loss of GDP of 7.7% in euro area up to 2020, and then on a rebound to 6.3% in 2021. "The depth of the recession and the strength of the recovery will be different depending on the country, conditioned to the speed with which they will be able to lift the measures of containment, the importance in every economy of services, such as tourism, and the financial resources of each of the States", he added.

In France, a recession is expected to 8.2% in 2020

unsurprisingly, the countries for which the european Commission expects the worst recessions this year are in order : Greece (-9,7%), Italy (with-9.5%) and Spain (-9,4%), all three very much dependent upon the expenditure of holiday-makers. In 2021, the Greek economy is expected to rebound to 7.9%, Italian 6.5% and Spanish by 7%.

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Countries, both in tourism and industry, France got very little better to compete with a recession expected to be 8.2% in 2020, and then a rebound to 7.4% in 2021. The first economy of the euro zone, Germany, very dependent on exports, will see its GDP shrink by 6.5% in 2020, the netherlands 6.8%, according to the spring forecast of the european Commission.

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Valdis Dombrovskis, one of the three vice-presidents of the european Commission, has proven to be very cautious on expectations : "at the present time, we can only establish provisionally the extent and severity of the shock of the coronavirus on our economies."

deficit spending increases

a Result of this historic recession, the government deficit should widen in all the member States of the euro area and their public debts, very greatly increase by 2020, before seeing the situation improve in 2021. But the country's already fragile before the crisis will be more vulnerable than others. Thus Italy, the country most grief-stricken by the pandemic of sars coronavirus in the euro area and with the economic situation worries its european partners, is expected to see its public debt to explode by 158,9% of GDP in 2020, after 134,8% in 2019.

Among the 19 countries that have adopted the single currency, with only Greece doing worse with a public debt to $ 196.4% of GDP in 2020. The public deficit of Italy, the third economy of the euro area should be the highest of the 19 countries to 11.1% of GDP this year. France, the second economy of the euro area, which showed a public deficit of 3% of GDP in 2019, should see them rise to a level "unprecedented" by 2020, 9.9% of GDP.

Policy support

"With unchanged policies, and assuming that the measures adopted in the fight against the pandemic will not apply until 2020, this deficit might appear to 4.0% of GDP in 2021, according to Brussels. The debt of France is expected to widen broadly, to 116.5% of GDP this year, before reducing slightly to 111,9% in 2021. It has reached 98.1% of the GDP in 2019.

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But even Germany and the netherlands, in normal times, followers of the budgetary discipline, have given up this year with the rigor to help their companies put to the test by the containment. Thus, the deficit German public will reach 7% of GDP this year, after a surplus of 1.4% in 2019. In 2021, the deficit should, however, be significantly reduced to 1.5%. As for the netherlands, their public deficit is expected to reach 6.3% of GDP in 2020 after being in the green in 2019 (up 1.7%). It should be reduced to 3.5% in 2021.