European Economic Forecast (Summer 2020)
08.06.2020
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
Article
04.30.2020
Horizon 2020: a look at the EU’s flagship rail projects
As it reaches its final year, Horizon 2020 continues to support research and innovation projects across the European Union. How has it helped advance the bloc’s rail infrastructure, what have its successes been and what more can be expected?
Article
07.23.2020
EU car sales forecast 2020: Record drop of 25% expected this year, says ACEA
In the light of the major economic crisis facing the auto industry due to COVID-19, the European Automobile Manufacturers’ Association (ACEA) has radically revised its 2020 forecast for passenger car registrations down to about −25%.
Source: European Automobile Manufacturers Association