By Eliman Dambell
Ahead of tomorrow’s European Union Commission economic forecast, data has been released which shows bad signs for what is to come. According to PMI (Purchasing Managers’ Index) data released from IHS Markit’s Flash Composite report, the majority of economic growth not only fell but stood still in April. With the quoted number at around 13.5.
The data showed that this was the weakest economic indication within the union since 1998. According to the chief business economist at IHS Markit. “April saw unprecedented damage to the euro zone economy amid virus lockdown measures coupled with slumping global demand and shortages of both staff and inputs,”.
Around the world, it is estimated that around a quarter of earth’s population have been told to stay at home, as doctors and scientists battle the “invisible enemy”. In Europe, the lockdown has lasted close to 2 months for many. Europe was the Epicenter of the virus for much of March, and the beginning of April, before being overtaken by the United States.
The numbers say that Europe’s 4 biggest countries by GDP, Germany, France, Spain and Italy have had around 700 – 800 thousand reported cases of the Coronavirus. With a death rate close to 10% of those infected.
However as the weeks progressed and we began to head into May, the numbers of new cases have gradually decreased, which has led many to believe that the lockdown of the continent may be nearing the end.
Tomorrow’s economic forecast will be anticipated by many to see how much the Eurozone has been impacted by the current crisis. It is expected that growth forecasts will be weaker than any other time perhaps since the 2008 crash. Leading to growing fears of potentially the biggest economic downturn to hit the EU bloc since its formation.
Regarding the possibility of a recession a senior Economist at one of Europe’s largest banks, BNP Paribas stated that, “The deeper the recession goes and the longer it lasts, it increases the risk that we have more damage to the supply potential of the economy since the likelihood of workers becoming unemployed and companies going bust is high,”
This comes irrespective of the €1 trillion asset purchasing program laid out by the European Central Bank.
The next step now will be to glance towards the middle of May, where most EU countries like Italy and Germany plan to re-open their economies. This is expected to be done in a gradual process, and take place sector by sector, whilst still maintaining some aspects of social distancing.
This could see a rise in optimism for many, however although the lockdowns may be coming to an end, many may face prolonged unemployment as their previous employers no longer have the ability to afford salaries. This along with the risk of a new spread may mean it could be sometime before Europeans go back to the way of life they have been accustomed to in recent years.