The European Commission (EC) said that despite a policy response at both the European Union (EU) and national level, the bloc's economy will experience a recession of historic proportions this year due to the coronavirus pandemic.
In an economic forecast on Wednesday, the EC said that the euro area economy will contract by a record 7.75 per cent in 2020 and grow by 6.25 per cent in 2021, reports Xinhua news agency.
As the pandemic has hit all EU member states, the economic shock will be symmetric, but on different levels.
The sharpest decline in economic output is 9.75 per cent in Greece, and Poland was expected to fare the best contract by only 4.25 per cent, according to the forecast.
The unemployment rate in the euro area was expected to rise from 7.5 per cent in 2019 to 9.5 per cent in 2020 before declining again to 8.5 per cent in 2021.
Consumer prices were expected to fall significantly due to the drop in demand and the steep fall in oil prices, which together should more than offset isolated price increases caused by pandemic-related supply disruption, according to the forecast.
"Europe is experiencing an economic shock without precedent since the Great Depression," European Commissioner for the Economy Paolo Gentiloni said.
The EU and member states have spent heavily to support the economy, and as a result, the aggregate government deficit of the euro area and the EU is expected to surge from just 0.6 per cent of GDP in 2019 to around 8.5 per cent in 2020, before falling back to around 3.5 per cent in 2021.
After having been on a declining trend since 2014, the public debt-to-GDP ratio is also set to rise.
The EU's executive arm also underlined that the forecast, where the baseline assumes that lockdowns will be gradually lifted from May onwards, was clouded by a higher than usual degree of uncertainty.
( With inputs from IANS )