The European Union’s economy is on track to contract by 7.4 percent this year — shrinking at a higher rate than during the Great Recession — in the aftermath of COVID-19 devastation.
The European Commission said Wednesday (May 6) that investment is expected to collapse and unemployment rates and deficits skyrocket. In contrast, the commission had estimated the EU’s economy would grow by 1.4 percent earlier this year, CNBC reported.
The commission now predicts that the COVID-19 crisis will cause the deepest economic decline since the Great Depression in the 1930s.
“Europe is experiencing an economic shock without precedent since the Great Depression,” Paolo Gentiloni, European commissioner for the economy, said in a statement.
“Both the depth of the recession and the strength of recovery will be uneven. … Such a divergence poses a threat to the single market and the euro area,” he said.
The commission predicts that Italy, hit hard by the coronavirus, will see its economy shrink by 9.5 percent. The economy in Greece is seen as shrinking even more.
At this point, Italy’s economy has shrunk by 18 percent, but the commission said there it could bounce back later in the year. Even economic powerhouse Germany is predicted to shrink by 6.5 percent.
As previously reported in this space, the EU’s industry chief, Thierry Breton, has called for a “Marshall Plan” for European tourism. The Marshall Plan helped western European countries recover from World War II’s devastation.
Breton predicted last month that Europe’s travel industry could contract as much as 70 percent — and though it was the first sector of the economy to be hit by the coronavirus, it could be the slowest to recover.
Italy and Spain, in particular, were slammed by the virus and both are economically dependent on tourism.
“I certainly hope that we can start traveling again, despite the restrictions, and as soon as this summer,” Breton said at the time, noting he was organizing a tourism summit for September.