EU Fears Worst Recession

The 27-member European Union (EU) economy is forecast to contract by 8.3 percent in 2020 and grow by 5.8 percent in 2021, the European Commission has said in its “Summer 2020 Economic Forecast”…reports Asian Lite News

The European economy will face a “deeper recession” than previously predicted due to the prolonged containment measures on the Covid-19 pandemic, the European Commission has said in its “Summer 2020 Economic Forecast”.

The 19-member eurozone economy is projected to contract by about 8.75 per cent in 2020 before recovering at an annual growth rate of 6 per cent next year, said the Commission on Tuesday, Xinhua reported.

The 27-member European Union (EU) economy is forecast to contract by 8.3 percent in 2020 and grow by 5.8 percent in 2021, it said.

Compared with the spring forecast published in May, the summer one’s projections on economic contraction in 2020 are somewhat dimmer and recovery in 2021 slower.

In its spring forecast, the Commission projected that the eurozone economy would contract by 7.75 per cent in 2020 and grow by 6.25 per cent in 2021, and the EU economy was forecast to contract by 7.5 per cent in 2020 and grow by around six per cent in 2021.

With a far longer period of disruption and lockdown taking place in the second quarter of 2020, economic output is expected to have contracted significantly more than in the first quarter, said the Commission.

Early figures for May and June have suggested that “the worst may have passed,” and recovery is expected to gain traction in the second half of the year, it added.

However, the hit to the economy was so strong that the partial rebound in the second half of the year will not be able to lift the annual growth rate significantly, said Paolo Gentiloni, EU commissioner for the economy.

“The chart shows how far we will have to move away from the growth path that we had expected before the pandemic occurred,” he told the press on Tuesday.

According to Gentiloni, a similar trend was observed in the world economy (excluding the EU). In the first quarter of 2020, the world economy outside the EU is estimated to have contracted by more than three percent quarter-on-quarter, partly because of the impact of the anti-virus measures taken by China in the first three months. In the second quarter, the world’s output declined much deeper owing to the global Covid-19 pandemic.

“The still rising daily infections at global level do not bode well for the world economy,” said the commissioner, who predicted a decline in the overall real global gross domestic product (GDP), excluding the EU, of around four per cent in 2020 and a five-per cent recovery in 2021.

European Commission President Ursula von der Leyen speaks at a press conference following the Republic of Korea-EU leaders’ video conference at the EU headquarters in Brussels, Belgium
A couple near Buckingham Palace in London

“Importantly, we believed we could do it. For though the pandemic is first a question of science, in practice it is really a question of statistics, mathematics, and modeling/forecasting. These disciplines are in our sweet spot,” a report by David Capital Partners said,

“Many believe that the only two paths out of the pandemic are either a vaccine or ‘herd immunity’.

We see this as a false choice. In fact, we believe the most likely outcome is a third and different path: that C19 has reached its “disease break point” in the US/Europe such that population-level spread is now in inexorable decline”, the report said.

Based on these and other data sets, the report estimates the COVID-19 asymptomatic rate is roughly 75% of infections. For each symptomatic C19 infection, three more are asymptomatic. The multiplier is 4x.

Combining the estimates for symptomatic and asymptomatic infections yields a multiplier of 24-40x. With 2.3 million confirmed cases to-date, this indicates between 55 million and 92 million Americans(17%-28% of the population) may now have infection-acquired specific resistance to COVID-19.

The report says that if C19’s R0 is 2.5-3.0 and its herd immunity threshold is 60%-65%, then the disease break point would be only 15%-20% specific resistance (a population’s precise disease break point likely varies somewhat due to differences in susceptibility and social graphs).

A girl poses for a photo with the Eiffel Tower on the backdrop by a fountain at the Trocadero Place in Paris, France, July 25, 2019. Temperature in Paris hit 42 degrees centigrade on Thursday. (Xinhua/Gao Jing/IANS)

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