Economic toll grows in coronavirus-rampaged Europe

The coronavirus pandemic, which had claimed over 60,000 lives and infected more than 700,000 people in Europe as of Wednesday, has begun to spread economic gloom in the continent.

Over the past days, noted economic think tanks, central banks and government officials in Europe had issued gloomy economic outlooks for major European economies, such as Germany, France, Italy and Britain.

• Forecasts: COVID-19 peak death rate in Europe to occur in late April
• UK may end up with Europe’s worst COVID-19 death toll – study warns

GLOOMY OUTLOOK

On Wednesday, Germany’s leading economic institutes forecast that the economic output of Germany, Europe’s main engine of growth, was likely to shrink by 4.2 percent in 2020 due to the impact of the coronavirus.

The joint forecast was prepared by the German Institute for Economic Research, the ifo Institute, the Kiel Institute, the Halle Institute for Economic Research, and RWI Essen.

According to the forecast, Germany’s gross domestic product (GDP) was likely to shrink by 1.9 percent in the first quarter and would fall by 9.8 percent in the second quarter.

The institutes predicted that as a result of the pandemic, the country’s unemployment rate would rise to 5.9 percent “at its peak” in 2020.

Germany would also end up with a “record deficit” of 159 billion euros (172.8 billion U.S. dollars) this year, compared with a positive balance of 45.3 billion euros in 2019.

In neighboring France, the central bank BdF said that the country’s economy shrank by 6 percent in the first quarter of the year, its worst performance since 1945, due to slack industrial, service activities and turbulent financial market caused by the pandemic.

The bank had previously estimated growth of 0.1 percent for the January-March period of this year.

The French government had instituted two-week confinement on March 17 to contain the outbreak. The lockdown was prolonged by 15 days until April 15, and would likely be extended. Every two-week confinement would lead to a 1.5 percent loss in GDP, said the central bank.

A report by the bank, based on the interviews of 8,500 business leaders from March 27 to April 3, showed that French economic activity dropped by 32 percent because of the coronavirus lockdown.

In Britain, a report published Monday by the Center for Business and Economic Research, a think tank, said the country’s economic output would reduce by 31 percent due to the current level of lockdown to fight COVID-19.

Morgan Stanley forecast last month that the British economy will contract by 5 percent this year, in sharp contrast to the most recent official growth forecast of 1.1 percent from the Office for Budget Responsibility.

Source: Xinhua – BRUSSELS