The eurozone economy is set to shrink by 7.75 percent this year due to the coronavirus, a contraction overshadowing the worst of the financial crisis in 2009.
The European Commission called it a “recession of historic proportions” today in its spring forecast, which also warned EU unemployment could climb to 9 percent this year.
Things could get still worse depending on how the pandemic evolves, the Brussels executive said. The financial crisis contracted the eurozone economy by 4.5 percent in 2009 and left around 10 percent of workers without a job.
The euro-area economy should bounce back next year with gross domestic product growing by 6.25 percent, the Commission added. But the recovery will differ across the single currency union.
“The depth of the recession and the strength of recovery will be uneven, conditioned by the speed at which lockdowns can be lifted, the importance of services like tourism in each economy and by each country’s financial resources,” the Commission’s economy chief, Paolo Gentiloni, said in a statement.
“Such divergence poses a threat to the single market and the euro area,” he continued — a divergence that would exasperate a north-south divide in the EU that began after crises in the financial system and government debts.
“Yet it can be mitigated through decisive, joint European action,” the Italian said. “We must rise to this challenge.”
Gentiloni’s rallying call comes as President Ursula von der Leyen scrambles to propose to leaders a trillion-euro recovery fund that can revive the bloc’s economy.