EU economy likely to shrink 1% in 2020 because of coronavirus: Commission

[BRUSSELS] The EU economy is likely to shrink 1 per cent this year as a result of the coronavirus, a European Commission document showed, but officials said internal Commission estimates were more pessimistic and pointed to a recession of even 2.5 per cent.

"The Covid-19 crisis is estimated to have a very large detrimental economic impact on the EU and euro area," the Commission document said.

"The direct impact through all channels is estimated to reduce real GDP growth in 2020 by 2.5 percentage points compared to a situation where there would be no pandemic," it said.

"Given that real GDP growth was forecast to be 1.4 per cent for the EU in 2020, this would imply it could fall to just over -1 per cent of GDP in 2020, with a substantial but not complete rebound in 2021," it said.

But officials said that an internal Commission paper put the coronavirus impact at a negative 3.9 percentage points, rather than 2.5 points, which would make the recession even deeper.

EU finance ministers are discussing new ways of dealing with the economic damage wrought by the epidemic in a videoconference on Monday and officials said they are to come up with a large coordinated economic response package. 

REUTERS