EU may see 7.4% contraction during 2020 in worst economic shock since 1930s

The European Union will contract 7.4% in 2020 as the coronavirus pandemic brings the worst economic shock since the Great Depression in the 1930s, the European Commission said Wednesday.

The executive arm of the EU has released its latest economic forecasts — the first estimates since European countries introduced lockdown measures to stop the spread of the virus. In February, the European Commission estimated a 1.4% rise in GDP for the EU this year.

“While the immediate fallout will be far more severe for the global economy than the financial crisis, the depth of the impact will depend on the evolution of the pandemic, our ability to safely restart economic activity and to rebound thereafter,” Valdis Dombrovskis, vice-president for economic affairs said in a statement.

European governments are working on plans to lift confinement measures after several weeks in lockdown. Italy, Portugal, Greece, Germany and Austria are just some of the countries which have started lifting some of their respective restrictions.

However, the reopening of economies is happening gradually, meaning that their overall business activity will be impacted for months to come.

“Europe is experiencing an economic shock without precedent since the Great Depression,” Paolo Gentiloni, European Commissioner for the economy, said in a statement.