FX.co ★ EU economy to hardly recover soon

This spring, the eurozone faced the deepest recession ever caused by a global lockdown. According to the European Commission's quarterly report, the eurozone's GDP will decline by 7.8% in 2020. Next year, GDP will grow by 4.2%, and in 2022 - by 3.0%.

Over the summer, the European economy managed to recover almost completely, showing record growth rates. However, the sharp growth in the number of infected people in autumn canceled out the success. The second wave of the coronavirus forced many countries to reintroduce restrictive measures. As a result, the economic recovery began to slow down.

A decrease in GDP is expected in all EU countries, but the damage is uneven. Spain, France, and Italy have been hit hardest, according to the European Commission's estimates. The GDP's drop in these countries may exceed 9%. For comparison, in Germany, GDP fell by only 5.6%.

Moreover, Spain and Italy have the highest daily COVID-19 incidence rates. In some regions, quarantine has been already reintroduced. Also, Italy joined countries such as France, Britain, and Germany in suspending vast sectors of their economies.

Besides, in Germany, industrial production rose less than expected in September. In other words, the continent could be hit by a double recession.

The scale of the virus spread and the severity of the measures taken to contain COVID-19 are different. In other words, each EU country will take a different amount of time to recover from the consequences. State support measures play an important role in this situation as well.

By the way, Vice-President of the European Commission Valdis Dombrovskis informed of the new NextGenerationEU package of measures, which was created in order to provide significant support to those regions that have been most affected by the coronavirus.

Meanwhile, amid a weakening economy and fear of the virus, European indices fell.

Germany's DAX lost 0.5%, France's CAC 40 fell by 0.4%, and the UK's FTSE decreased by 0.2%.

On Friday, oil prices fell under pressure from signs of the overproduction at OPEC and more drastic discounts from Saudi Arabia to consumers in Asia.

WTI crude futures lost 1.2% to trade at $38.34 per barrel, Brent crude fell by 1.3% to $40.42 as well.

Gold futures rose by 0.1% to hit $1,949.30 per ounce.

EUR/USD increased by 0.2% to settle at 1.1848.