FX.co ★ EU economy sinks into severe recession

The EU economy is still in the grips of the coronavirus pandemic which makes experts revise their gloomy forecasts. Actually, before the COVID-19 outbreak, the EU economy had been plumbing new depths. The coronavirus-driven crisis wrecked the hopes for a recovery in the ailing economy of the euro block. Lockdown measures have left an imprint on all sectors of the economy and disrupted the labor market in 27 countries of the euro bloc. The ECB projects a sharp 5.5% contraction in the eurozone’s GDP for 2020. Besides, the experts warn that most economic sectors will need a longer time to regain momentum than originally expected. The revival is going to unfold amid soaring unemployment rates which could climb as high as 9.4% this year. The jobless rate is expected to edge down to 8.9% in 2021 and decline to 8.4% in 2022. The median long-term forecast for unemployment in the EU was upgraded by 0.4% to 7.7%. Under the best-case scenario, the economy in the euro area could reveal the green shoots of recovery next year with a 4.3% economic growth. However, GDP is likely to slow down to 1.7% in 2022. The median long-term forecast for the eurozone’s GDP is left at 1.4%.