EU Forecasts Its Regional Economy to Shrink by 8.3% due to the Covid-19 Lockdown Impact

The European Commission predicted the EU economy this year to shrink by 8.3%, followed by a rebound of 5.8% in 2021 as the Covid-19 pandemic keeps taking a toll on the 27 member states.

For the Euro area, the Commission projected the euro economy to contract by 8.7% this year and grow by 6.1% in 2021. 

“The economic impact of the lockdown is more severe than we initially expected. We continue to navigate in stormy waters and face many risks, including another major wave of infections,” Valdis Dombrovskis, vice-president of the European Commission, said in a statement Tuesday.

“The contraction in 2020 is, therefore, projected to be significantly greater than the 7.7% projected for the euro area and 7.4% for the EU as a whole in the Spring Forecast. Growth in 2021 will also be slightly less robust than projected in the spring.” said the Summer 2020 Economic Forecast: An even deeper recession with wider divergences by the European Commission.

In recent days, concerns have emerged about regional outbreaks after the Spanish authorities have re-imposed restrictions in Galicia region, and Portugal reinstated some measures in Lisbon after a rising number of infections.

In addition, the Brussels-based organization is also urging the member-state leaders to back a major stimulus programme to revitalise their economy, when they meet for a crunch summit later this month.