The European Commission has warned that the European economy will face deep and uneven recession, followed by uncertain recovery.
The European Union will be experiencing the deepest recession in its history, the European Commissioner for the Economy, Paolo Gentiloni announced on Wednesday. He added that the European economy will contract by a record 7.4%. Commissioner Gentiloni explained that the COVID-19 pandemic, which will have severe social and economic consequences, significantly affected economic forecasts.
The EC spring forecast shows that recession and recovery will be uneven across the EU. The European Commissioner also said that insisting too much on state aid risks affecting the single market and its competiveness, that is why the EC will soon publish a unitary recovery plan. “Each Member State's economic recovery will depend not only on the evolution of the pandemic in that country, but also on the structure of their economies and their capacity to respond with stabilizing policies, given the interdependence of EU economies”, Commissioner Gentiloni went on to say.
The coronavirus pandemic has severely affected consumer spending, industrial output, investment, trade, capital flows and supply chains. “The expected progressive easing of containment measures should set the stage for a recovery. However, the EU economy is not expected to have fully made up for this year's losses by the end of 2021. Investment will remain subdued and the labor market will not have completely recovered” said Paolo Gentiloni.
According to the EC forecasts, only several countries will recover in the last semester of 2020: Germany, Austria, Poland and Slovakia. The countries that will report the severest economic contraction are Italy, Spain and France. As for Romania, the EC forecasts show that the GDP will drop by 6% in 2020, to increase in 2021 by 4.2%. According to Paolo Gentiloni Romania is expected to report a budget deficit of at least 8%. Actually, almost all the other EU Member States are expected to report higher deficits because they have to support the economy with liquidities and to protect jobs.
The European Commissioner also warned that, despite the measures taken, the unemployment rate will grow and the working hours will be reduced. According to the EC Spring Economic Forecast, in Romania the unemployment rate will reach 6.5 % in 2020 and 5.4% in 2021. As regards the inflation rate, it will reach 2.5% in 2020 and it is going to rise next year.
Bucharest authorities are convinced that Romania will come out well from the crisis caused by the coronavirus pandemic and that the economy will recover fast, given that several economic sectors have already resumed activity these days and that the government has announced more support measures. (tr. by L. Simion)