COVID-19 Update: Long-term Impact on Europe

Europe’s Loss: The Long-term Economic Impact of COVID-19   An analysis by Ilaria Maselli, Senior Economist and Klaas de Vries, Economist

 

 

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Among mature economies, the Euro Area has been one of the most adversely affected by the shock of the COVID-19 pandemic. Euro Area GDP is expected to finish 2020 with a -8.4 percent decline compared with an average decline of -5.4 percent for all mature economies. Growth will pick up in 2021, but how will this shock affect growth later in the decade? Compared to estimates The Conference Board made in 2019, the Euro Area economy will likely be 6 percent smaller by 2030 than initially projected (scenario 1 in chart). According to a more pessimistic projection (scenario 2 in chart), however, this gap could be as large as 9 percent. This loss in economic output is partly due to the deep recession caused by the pandemic but is also the result of anemic long-term potential growth rates beyond 2023. For more a more detailed look at The Conference Board Euro Area outlook, download our new report: “ GEO 2021 Europe: Uncertainty Lingers in 2021, Slow Growth Returns for the Long Term”