European Economic Forecast (Summer 2020)

06.08.2020

In a new European Economic Forecast, the European Commission expects a deeper recession and a slower recovery for the economy of the Union. However, the blow caused by the pandemic differs from country to country with some states and industries expected to recover faster due to internal factors.

Overall, the euro area economy is forecast to contract by about 8.3% in 2020 before recovering at an annual growth rate of 6% next year. While economic disruptions have been broad based, first quarter data also confirmed the highly asymmetrical nature of the impact across countries and industries. For the second quarter, all screened indicators suggest an acceleration of the contraction in economic activity with persisting differences across countries and industries. Looking forward to the second half of the year and 2021, the European economy is expected to bounce back, but with bigger and more persistent differences across Member States than expected in spring. In Germany, the massive fiscal stimulus is expected to boost demand, so it is therefore expected to pave the way for a relatively swift recovery, starting in the second half of this year.

The impact has also been highly asymmetrical among industries. The sharpest declines were observed in trade, transport, accommodation and food services as well as arts, entertainment and other service activities (both at −6.8% q-o-q). Agriculture, forestry and fishing, together with financial and insurance activities saw the mildest declines (at −0.8%). Industrial production collapsed by 17.1% in April, resulting in a cumulative contraction of about 27% since February. The most affected industries were the manufacture of motor vehicles, trailers and semi-trailers (about −70%), as well as that of leather and related products (around −60%) followed by clothing (around −40%). Most activities saw output contractions of between 15% and 25%.


Analytics on topic
Report
27.05.2020
Report
27.05.2020
Monitoring the situation internationally - Germany
Germany registered its first Corona-case on January 27, and as of April 30 around 162,500 cases have been reported, and 6.572 deaths have been registered. 123,500 people have reportedly recovered from the virus. This report intends to provide DI’s members with a selection of information on essential developments related to the Corona crisis in Germany.
Report
11.12.2020
Report
11.12.2020
EU-China Trade and Investment Relations in Challenging Times
Trade continues to be the least problematic aspect of the EU-China economic relationship. The BRI offers potential trade gains for Europe by improving physical connectivity with countries along the route to China, but it also poses challenges for the EU. While Chinese investment in Europe is growing and has focused strongly on technology, it raises the question of whether the EU should fear losing its technological edge, especially when Chinese state-owned companies might distort competition through foreign acquisitions.
Source: European Parliament