According to the finance chief of the EU, Europe is facing a recession of historic proportion in 2020. The aftershock of the coronavirus will be felt intensely as some countries will be hit harder than others. We will have to see how countries come out of lockdown and when industries like tourism can start again before knowing the full size of the crisis.
A Crumbling Economy due to the Lockdown
No one had predicted that 2020 would see a major recession hit Europe and the rest of the world. But that was before the coronavirus came to life in China and headed out to most countries around the world, forcing them to go in lockdown mode in order to save lives. When it will all be said and done, the damage in the world economy will be as great as the number of deaths left on the trail of the virus.
It is now predicted that the economy of Europe as a whole should contract by 7.7% this year and that it would see flat inflation. That is what the European Commission announced through its finance Chief, Paolo Gentiloni. But these figures have been quite fluid since the beginning of the pandemic and are bound to continue to change for a while. If you want to stay informed on the latest data, you can find an online financial magazine which can keep you updated on the situation.
Not All Countries Will Face the Same Difficulties
Some countries were hit much harder by the COVID-19 than others. Italy was the one with the most deaths caused by the pandemic for a long time before the USA and the UK overtook them. Still, with over 30,000 officially deceased from symptoms related to the coronavirus, the country is suffering greatly and has only started coming out of the lockdown in early May, after two months. The region of Lombardia and its capital Milan were one of the hardest hit. Since the city is also the economic center of the country, it has affected it greatly. It still hasn’t returned to normal yet.
The same thing happened in Spain where Madrid became the center of the health crisis. The speed with which the coronavirus entered the country and started to decimate it was devastating. The lockdown imposed on the citizen was total, and the economy was at a complete stop. These two countries as well as Greece and Portugal will be the hardest hit in Europe. But France will also see difficult days ahead. With an end to the lockdown on May 11 that sees a country divided in two on a map of its territory, it will be a long road to full recovery which will leave many (especially in the tourism industry) with few to no financial resources other than the government’s help.
All this will create important public debt increases and budget deficits causing countries to revise deeply the financial path they were on before the sanitary crisis happened. With investments predicted to be reduced by 13.3%, the governments will need to keep on compensating for a while still.
