Euro Area Economy Is Expected To Fall By As Much As 7.8% This Year

Euro Area Economy Is Expected To Fall By As Much As 7.8% This Year

According to the latest forecast of the European Commission (EC), the euro area economy is expected to fall by as much as 7.8% this year, while its return to growth in 2021 and 2022 looks weaker than previously expected. This will be the largest economic downturn in the region's history, but less dramatic than the Commission had expected in July, when it predicted a fall of 8.7% in the euro area. The second wave of the new coronavirus pandemic halted the recovery of the monetary bloc economy from the crisis caused by the spring blockades after the outbreak of the pandemic. In this context, the Commission warned that the Euroregion's economy would not return to the so-called pre-pandemic level before 2023. The Commission also said in its latest forecast that the eurozone will return to growth next year, which will be weaker than estimated in the summer. According to the EC, the gross domestic product (GDP) of the euro area will increase by only 4.2% next year, instead of 6.1%, as predicted in July. In 2022, the Commission expects euro area GDP to increase by 3%, which is also a weaker estimate than in July. This is due to great uncertainty, as the virus is spreading rapidly across Europe and governments are reintroducing blockades. Across the European Union (EU), the Commission predicts a 7.5% decline in GDP this year and a 4% increase in 2021 and 3% in 2022 next year. According to the latest forecast, the Slovak economy will decline by 7.5% this year, in 2021 its GDP will increase by 4.7% and in 2022 by 4%. "EU economic output will not return to pre-pandemic levels until 2022," Commission Vice-President Valdis Dombrovskis said on Thursday. Uncertainty about the continuation of the new coronavirus pandemic and Britain's exit from the EU single market is weighing on growth prospects, according to the Commission.