Europe faces a “historic” economic recession beyond the 1929 recession

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                The European Commission expected that the European Union will witness a "historical" recession this year, due to the repercussions of the Corona pandemic. European Commissioner for Economy Paolo Gentiloni stressed that "Europe faces an unprecedented economic shock since the Great Depression" that occurred in 1929.
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                                    <p>After the Covid-19 epidemic broke out in the world and its repercussions on the economy, the European Commission on Wednesday predicted a "historic" recession in<a target="_self" href="https://www.france24.com/ar/video/20200430-اكبر-تراجع-للنمو-منذ-انشاء-العملة-الموحدة-عام-١٩٩٩" rel="noopener noreferrer"><strong>  European Union</strong></a>  This year.

European Commissioner for Economy Paolo Gentiloni stressed that “Europe faces an unprecedented economic shock since the Great Depression” that occurred in 1929.

The Commission expects a record decrease in gross domestic product of 7.7 percent in the euro area, and a recovery of 6.3 percent in 2021.

This disaster puts pressure on Brussels to present a plan aimed at stimulating growth European economist. But there is division among Europeans about the solutions to be adopted.

“We are making a great effort,” Gentiloni said. “This is not an easy job … I expect the plan will be born in the coming weeks and I am confident (that the member states) will approve it in June.”

He added that “the depth of the recession and the strength of the recovery will be uneven according to the countries, depending on the speed of lifting the isolation measures and the importance of services in every economy such as tourism and financial resources for each country.”

As expected, the countries that will witness their worst recession this year, according to the commission, are in sequence Greece (-9.7 percent), Italy (-9.5 percent) and Spain (-9.4 percent), the countries most dependent on the sector tourism.

“We have to do hard work so that this sector can withstand the summer,” Gentiloni said.

The European Commission plans to launch a tourism plan next week, with broad outlines that address health conditions in places where people spend their holidays.

And France, the tourist and industrial country, is no better off, as its economy is expected to record a contraction of 8.2 percent in 2020, and a 7.4 percent recovery in activity in 2021.

As for the pioneering economy in the euro area, Germany, which is heavily dependent on its exports, will witness a decrease in GDP by 6.5 percent in 2020, and the Netherlands by 6.8 percent, according to the spring forecasts of the European Commission.

Insulation exam

As a result of this Historical recessionIt is expected that the public deficit will increase in all member states in the euro area and that their debts will increase significantly in 2020 before the situation improves in 2021.

But countries that were fragile before the crisis will suffer the consequences more than others.

Italy, the country that has suffered the greatest number of deaths from the emerging corona virus in the eurozone and the situation in which its European partners are concerned, will witness a massive increase in its public debt to reach 158.9 percent of GDP in 2020, compared to 134.8 percent in 2019.

Among the 19 member states of the eurozone, only Greece suffers from a worse public debt situation of 196.4 percent of GDP in 2020.

As for the general deficit of Italy, the third economy in the euro area, it is expected to be the largest among the 19 countries and reach 11.1 percent this year.

According to the Commission’s expectations, France’s debt will increase significantly to 116.5 percent of GDP this year, before dropping slightly to 111.9 percent in 2021, and it reached 98.1 percent of GDP in 2019.

As for the general deficit, it is expected to reach 3 percent of GDP in 2019 and rise to an “unprecedented” level in 2020, to 9.9 percent of GDP.

The European Commission added that this deficit could reach 4.0 percent in 2021 “if policies do not change and if we assume that measures to combat the epidemic will only be applied in 2020”.

Even Germany and the Netherlands, which are very strict in budgets in normal times, this year abandoned their strictness to help companies bypass the isolation exam.

Therefore, Germany’s public deficit will reach 7 percent of GDP this year, after a surplus of 1.4 percent in 2019. But in 2021 this deficit is expected to decrease to 1.5 percent.

In the Netherlands, the public deficit is assumed to be 6.3 percent of GDP in 2020, after a surplus of 1.7 percent in 2019. It will fall to 3.5 percent in 2021.

France 24 / AFP

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