Europe’s Economy to Slump More Than 10% on Virus Measures

(Bloomberg) --

Europe is heading for a double-digit slump in the first half of 2020 amid widespread lockdowns to stem the spread of the coronavirus, according to economists.

Bloomberg’s monthly survey puts the contraction in the euro area at more than 10% in the January-June period, with most of the hit -- 8.3% -- in the second quarter. Even with an expected rebound later in the year, the bloc’s output will still decline more than 5% in 2020.

The survey results aren’t the only gloomy numbers to emerge on Tuesday. The International Monetary Fund predicts the 19-country bloc will contract 7.5% this year thanks to what it calls the “Great Lockdown,” with the world economy shrinking 3%.

In its first World Economic Outlook since the virus outbreak, the IMF said the global recession will be the steepest in almost a century.

Among the major euro-area countries, Italy will be the worst affected major economy, with a 9.1% contraction, followed by Spain at 8%.

In France where the government extended confinement measures to May 11, the IMF sees a 7.2% hit this year. Finance Minister Bruno Le Maire is even more pessimistic, saying on Tuesday that the slump could be 8%.

The Bloomberg surveys show widespread damage: Germany will shrink 7.6% this quarter, Italy 8.8%, Spain 10%, and the U.K. will suffer a near 12% contraction.

While rebounds are predicted later in the year, the timing depends on when restrictions on movement, gatherings and businesses are lifted, or at least eased.

©2020 Bloomberg L.P.