COVID-19 and the containment measures it has necessitated have profoundly disrupted people’s lives and the economy. The pandemic struck the European economy when it was on a moderate path and still vulnerable to new shocks. Given the severity of this unprecedented worldwide shock, it is now quite clear that the EU has entered the deepest economic recession in its history.

In 2020, EU GDP is forecast to contract by about 7½% this year, far deeper than during the Global Financial crisis in 2009. In 2021, the economy is projected to recover. As the shock wears off, a lower starting level in 2020 and a high carry over into 2021 should boost annual growth rates in 2021 to about 6¼% (Graph I.2.12). This rebound, however, would leave GDP at the end of 2021 about 3¼% smaller than the level projected by the winter interim forecast (published in February).

Source: European Economic Forecast: Spring 2020. DG ECFIN.