EU Economy Will Shrink By Historic Amount, Marking Deepest Recession In Its History, Forecast Shows

European Union officials have projected an economic downturn of historic proportions as the bloc of nations enters a severe recession.

On Wednesday, the EU's economy commissioner, Paolo Gentiloni, told reporters in Brussels that the 27-country union would experience "the deepest economic recession in its history." Releasing the EU's spring economic forecast, he explained that "economic activity in the EU dropped by around one-third practically overnight" because of the coronavirus pandemic.

The economic forecast projects a record decline in gross domestic product of 7.75 percent in 2020 within the 19-country bloc that uses the euro as its currency. The full 27-country bloc of EU nations will see a drop of 7.5 percent in GDP. Unemployment is also expected to rise across the EU, from 6.7 percent in 2019 to 9 percent in 2020.

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A European Union (EU) flag flutters in front of a newly hung banner that reads "Coronavirus Global Response" in front of the EU Commission building in Brussels, Belgium on May 6 KENZO TRIBOUILLARD/AFP/Getty

"Real-time data suggest that economic activity in Europe has dropped at an unusually fast speed over the last few weeks, as the containment measures triggered in response to the crisis by most Member States in mid-March have put the economy into a state of hibernation," the new economic forecast explained.

"Economic output is thus set to collapse in the first half of 2020 with most of the contraction taking place in the second quarter," the document added.

While the EU is projecting a return to economic growth in 2021, it is not expecting to catch up to pre-pandemic levels. The forecast projects that the full union will see GDP rise by 6.1 percent next year, while the eurozone will see slightly higher growth of 6.3 percent. Unemployment is projected to dip slightly across the EU, from the predicted 9 percent in 2020 to 8 percent next year.

Across Europe, more than 137,000 people have died from COVID-19, the disease caused by the novel coronavirus, as most governments have implemented strict lockdown measures to curb the spread of new infections. In total, more than 1.1 million people have contracted the virus across the EU, according to the European Center for Disease Prevention and Control.

Last week, the EU released preliminary economic data that showed the economy had shrunk by 3.5 percent in the first quarter of 2020. By comparison, in the last quarter of 2019, the economy expanded by 2.7 percent. The eurozone saw an even higher overall GDP dip, 3.8 percent. The EU statistics office noted that these were the "sharpest declines" recorded since 1995.

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A pedestrian wears a face mask as he walks past a newly hung banner in front of the European Commission's building in Brussels on May 6. KENZO TRIBOUILLARD/AFP/Getty

"Both the depth of the recession and the strength of recovery will be uneven, conditioned by the speed at which lockdowns can be lifted, the importance of services like tourism in each economy and by each country's financial resources," Gentiloni said in a Wednesday statement.

"Such divergence poses a threat to the single market and the euro area—yet it can be mitigated through decisive, joint European action. We must rise to this challenge," the commissioner added.