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From today’s point of view, Europe’s economic outlook this year will be slightly better than previous pessimistic expectations, but due to the second wave of the outbreak, Europe’s hopes of achieving economic recovery next year are increasingly dim.
The European Commission issued an economic warning for this fall period on November 5. At the same time, the committee continues to urge the European Parliament and the Council to agree on a $ 860 billion epidemic aid funding plan as soon as possible.
According to the European Commission forecast for this summer, the GDP of the entire EU will contract by 8.3% in 2020, higher than the 7.4% forecast this spring, and it will not be possible until 2021 to grow again by 5.8 %.
Now these forecasts have undergone further changes. The European Commission has readjusted the contraction in GDP forecast for this year to 7.4%, but the GDP growth rates in 2021 and 2022 have also fallen to 4.1% and 3%, respectively. The European economy may not recover for two years.
“The hope is gone”
“The result of the prediction stems from the second wave of the epidemic situation. It can be said that it is a very uncertain signal, which directly shattered our illusion of ‘achieving a rapid economic rebound.’ Valdis Dong, Economic Director of the European Commission Brovsky said in a statement.
EU Economic Commissioner Paul Gentiloni added: “It will take at least two years for the European economy to return to its pre-epidemic level.”
“We have reached a significant recovery plan and will provide the most support to the severely affected areas,” Donbrowskis said. “Once again I call on the European Parliament and the Council to finish as soon as possible. Negotiations on bailout funds are striving to have liquidity in 2021 so that we can invest, reform and rebuild as soon as possible.”
The European Commission does not approve the phasing out of aid in some countries in 2021. The Commission warned that risks related to corporate bankruptcies, supply chain disruptions and long-term national unemployment caused by the epidemic may have “deeper and wider” effects in the future. .
Unbalanced recovery
The “unbalanced recovery” is another issue that deserves attention. The situation between the countries of the European region is different. For example, Germany’s GDP is expected to fall by 5.6% this year and to grow by 3.5% and 2.6% in 2021 and 2022, respectively. However, Spain’s GDP is expected to slow down. contract at a much higher rate and is expected to fall 12.4% this year. 2021 and 2022 will increase by 5.4% and 4.8% respectively.
The European Commission stated: “The economic impact of the epidemic in the EU countries varies greatly and the prospects for recovery are also different. It depends on the epidemic situation in each country, the implementation of public health measures, the composition of the economic sectors and the country. Response corresponding to the implementation of the policy “.
To compare with the world, the European Commission also predicted changes in the GDP of other major countries in the world in the coming years. The committee expects total U.S. GDP to shrink 4.6% this year and then rise 3.7% and 2.5% in 2021 and 2022, respectively. The situation in the UK is not optimistic: it is expected to contract by 10.3% this year and then increase by 3.3% and 2.1% in 2021 and 2022, respectively.
The EU forecast for the UK is based on its “Hard Brexit”. This situation also means that the trade relationship between the UK and the EU has gone bad. The economic costs that the UK must bear have risen significantly, and the EU costs will also rise slightly. (Chinese network of fortune)
Compiler: Chen Yixuan
Europe’s economic outlook looks less bleak this year than previously feared, but its planned recovery for next year could be even weaker than expected, thanks to a resurgence in the number of COVID-19 cases across the continent.
That is according to the executive body of the European Union, the European Commission, which on November 5 issued its autumn economic forecast and asked the European Parliament and the Council, the two great political beasts of the EU, to conclude the negotiations on their $ 860 billion coronavirus recovery fund.
In the summer, the Commission forecast an overall 8.3% contraction of EU GDP for 2020, worse than the 7.4% contraction forecast in the spring, in the early days of the pandemic, and growth of 5 , 8% next year.
Now, the contraction forecast for 2020 has returned to 7.4%. Meanwhile, the forecast for 2021 growth has been lowered to just 4.1%, followed by 3% in 2022. That means the recovery wouldn’t be complete even two years from now.
‘Shattering our hopes’
“This forecast comes as a second wave of the pandemic is unleashing even more uncertainty and dashing our hopes for a rapid rebound,” Valdis Dombrovskis, the Commission’s chief economist, said in a statement.
The Commissioner for the Economy, Paolo Gentiloni, added that “it will be two years until the European economy is about to regain its pre-pandemic level.”
“We agreed [on] a historic recovery package … to provide massive support to the worst affected regions and sectors, ”said Dombrovskis. “I now call again on the European Parliament and the Council to quickly conclude the negotiations so that the money begins to flow in 2021 so that we can invest, reform and rebuild together.”
There is still a risk that bankruptcies linked to the pandemic, supply disruptions and long-term unemployment could “go deeper and more far-reaching,” the Commission warned, noting that many countries will phase out support measures from emergency in 2021.
Uneven recovery
The other important factor worth considering is that Europe’s contraction and recovery will likely be very uneven. For example, the Commission expects German real GDP to fall by 5.6% this year before growing by 3.5% in 2021 and 2.6% in 2022. But Spain registers a 12.4% fall this year , followed by growth of 5.4% and 4.8% in 2021 and 2022, respectively.
“The economic impact of the pandemic has differed widely across the EU, and so are the prospects for recovery,” the Commission said. “This reflects the spread of the virus, the rigor of public health measures taken to contain it, the sectoral composition of national economies and the strength of national policy responses.”
For global comparison, the Commission established probable contraction and recovery statistics for other major countries. He estimates that the US, for example, is forecasting a 4.6% contraction this year, followed by growth of 3.7% in 2021 and 2.5% in 2022. The UK is not looking good: a contraction of 10.3% in 2020, followed by growth of only 3.3% and 2.1% in 2021 and 2022, respectively.
The Commission’s EU and UK figures assume that there will be no post-Brexit trade deal between the two parties, implying “a much less beneficial trade relationship, with economic costs to the UK and to a lesser extent , The EU”.
