Eurozone Economic Forecast

Eurozone Economic Outlook

September 1, 2020

A second estimate confirmed the economy contracted at a record-breaking pace in Q2 as lockdowns to corral the coronavirus’ spread pummeled activity. Looking ahead, available data spells caution for a robust recovery in Q3. Although economic sentiment continued to climb in July and August, consumer confidence sagged, likely weighed on by rising new Covid-19 infections and the tightening of restrictions in several countries. Moreover, after jumping to an over-two-year high in July, the composite PMI eased markedly in August as services activity virtually stalled. Concerningly, manufacturing and services jobs were cut for the sixth month running amid still-subdued demand. Meanwhile, on 25 August, the European Commission presented proposals to the Council to provide EUR 87.3 billion in financing to 16 EU member states under the “SURE” instrument to help preserve jobs going forward.

Eurozone Economic Growth

The Covid-19 fallout is set to plunge the Eurozone economy into its worst contraction on record this year. Rising unemployment and income losses will hit consumer spending, investment will suffer amid elevated uncertainty, and collapsed foreign demand will hammer exports. A second wave of infections, strained public finances and trade tensions with the U.S. cloud the outlook. The economy is seen contracting 8.2% in 2020, which is unchanged from last month’s forecast. In 2021, GDP is seen increasing 5.6%.

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Eurozone Facts

Value Change Date
Exchange Rate1.120.65 %Dec 31

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