Euro zone will suffer record recession, Commission says

The euro zone economy will suffer a record 7.7% contraction due to the coronavirus pandemic. Inflation will likely almost disappear, while budget deficits and public debt will increase, according to the European Commission.

Inflation rate will slow to 0.2% in 2020 and will increase 1.1% next year, when the euro zone’s economic growth will rise 6.3%. Investment will drop 13.3%.

Budget deficits will rise 8.5% of GDP and will drop to 3.5% in 2021. Public debt will surge to 102.7% of GDP and will decrease to 98.8% in 2021.

Italy, Spain, Portugal, and Greece will suffer the hardest economic impact in the euro zone. Italy’s GDP will contract 9.5%, Spain’s GDP 9.4%, and Greece’s GDP 9.7%, the biggest of the three.

Italy’s budget deficit will climb 11.1% of GDP and will decline to 5.6% in 2021. The country’s public debt will rise a record 158.9% of GDP and will drop to 153.6% in 2021.

Italy is the EU country hardest hit in the coronavirus outbreak.