European Commission forecasts deeper slump amid 'more pronounced' economic divergences

Author: Justin Low | Category: News

EU now sees 2020 GDP at -8.7% vs -7.7% back in the May forecast

  • Euro area economy probably shrank by 13.5% in Q2
  • Economic recovery will be uneven across member states
  • There are 'sever' risks to the economic outlook, tilted to the downside
  • Euro area economic divergences are 'more pronounced'
  • Spain, France, Italy economies likely to shrink by more than 10% in 2020
  • German economy likely to shrink by 6.3% in 2020
That isn't quite comforting news for the euro but make no mistake, this will start to present a problem for the region in the months/years ahead.

The imbalance in terms of economic welfare and how hard member states are hit from the virus outbreak is going to grow and cause a divergence in terms of policy views that should be adopted by the bloc.

The commission also stressed on the urgency for a recovery fund as such, but don't expect that sentiment to translate into a sure-fire compromise going into the 17-18 July meeting.
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