The economy of the Euro area this year will be reduced by 7.75%, and the growth of the following does not compensate for this decline, from the spring forecast of the European Commission (EC). Hardest coronavirus pause hit the economies of Italy, Spain and Greece, the debt burden in many countries also will rise sharply — as a whole for the EU it will increase from 86% to 103% of GDP.GDP in the Euro zone this year will be reduced by 7.75%, and 2021-m increase by 6.25%, but its size and by the end of next year there will be approximately 3% less than previously expected, to be published the spring forecast of the European Commission. In the whole EU, the decline will be 7.5%, and growth next year of about 6%. If the outbreak will lead to re-imposition of restrictions, the GDP of the currency bloc will shrink by another 3 percentage points, according to the European Commission. The slowdown will affect all countries of the Union, but the depth of subsidence will be varied, from a decline in GDP of Greece, Spain and Italy in 2020 will exceed 9%, the German economy will shrink by 7.5%, France 8.2%. Unemployment increased sharply, especially in Spain. In General, the Euro area, the unemployment rate will rise from 7.5% to 9.5%, next year it will drop to 8.5%. Inflation, by contrast, will be reduced from 1.2% to 0.2% (and accelerating to 1.1% in 2021).In the result of the struggle with the coronavirus, the total fiscal deficit of the Union countries will increase from 0.6% in 2019 to 8.5% in 2020 (but will be reduced to 3.5% in 2021-m), and the ratio of debt to GDP will increase from 86% to 102,8% in 2020 and decrease to 98.8% in 2021-m. In particular, Italy’s debt to GDP will rise to 159% from 135%, Greece down to 196% with 177%, Germany — up to 76% from 60%. And this, ultimately, can threaten the stability of economic and monetary Union.Note, the head of the ECB, Christine Lagarde after the meeting said that the regulator is ready to “do everything necessary” to support the economy, assessing the range of falling GDP in the Eurozone this year 5-12%. Meanwhile, according to preliminary estimates by Eurostat, in the first quarter, the economy of the currency bloc fell by a record 3.6% quarter to quarter, even in the midst of a financial crisis in the first quarter of 2009, the decline amounted to 3.1%. According to the national stategist, Italian GDP fell by 4.7%, France 5.8%, Spain 5.2%. On the evaluation of Euler Hermes in the second quarter, the quarterly decline may increase to 17% (for the whole year is expected to decline by 9.3%).Tatiana Edovina
