6 MAY 20201. The deepest recession since the Great Depression with an uneven impact 2. An incomplete and uneven recovery 3. Inflation will be significantly weaker 4. Unemployment is set to increase, though policy measures should limit its rise 5. Necessary policy measures will cause public deficits and debt to rise in 2020 6. Risks to the outlook are exceptionally large and to the downside Key messages from the Spring 2020 European Economic ForecastA deep recession followed by a partial recovery GDP in 2021 to remain far below the level expected in the Winter Forecast -7.4 6.1 2.1 1.5 1.4 1.4 90 92 94 96 98 100 102 104 106 2018 2019 2020 2021 GDP Spring forecast, EU GDP Winter forecast, EU index, 2018100Global economy also set to contract Global growth and global imports excl. EU 3.9 3.7 3.0 -3 5 6.0 4.1 0.1 -10 7 -12 -9 -6 -3 0 3 6 9 12 -6 -4 -2 0 2 4 6 17 18 19 20 21 17 18 19 20 21 GDP growth excl. EU lhs World imports excl. EU rhs y-o-y y-o-y Real-time indicators reveal a broad-based shock Electricity consumption during the lockdown period compared to the same period of 2019 Air traffic compared to the same period of 2019 0 20 40 60 80 100 120 Mar 1 Mar 14 Mar 27 Apr 9 Apr 22 Total network DE FR IT ES Source Eurocontrol total flights, Instrumental Flight Rules of flights on the same day in 2019 78 95 84 87 50 55 60 65 70 75 80 85 90 95 100 IT DE FR ES lockdown period of the same period in 2019 Source Entso-e The period under consideration varies across countries Survey data point to a sharp decline in activity Manufacturing, Services, and Construction PMIs, euro area and Member States 10 20 30 40 50 60 10 20 30 40 50 60 Nov 19 Jan 20 Mar 20 Nov 19 Jan 20 Mar 20 Oct 19 Dec 19 Feb 20. Manufacturing Services Construction DE FR ES IT EA Source IHS Markit Flash PMIs for April 2020 Data available up to the cut-off date of the spring forecastFinancial market resilience has been tested Stock exchange indices 60 70 80 90 100 110 120 130 140 janv-18 fvr-18 mars-18 avr-18 mai-18 juin-18 juil-18 aot-18 sept-18 oct-18 nov-18 dc-18 janv-19 fvr-19 mars-19 avr-19 mai-19 juin-19 juil-19 aot-19 sept-19 oct-19 nov-19 dc-19 janv-20 fvr-20 mars-20 avr-20 mai-20 Euro STOXX 600 US SP 500 Index, Jan 2018100 Source MacrobondLabour markets hit but policy measures cushion the blow Employment and unemployment rate, EU 1.6 1.4 1.0 -4 3 8.1 7.2 6.7 9 8 6 7 8 9 10 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 17 18 19 20 21 17 18 19 20 21 Employment lhs Unemployment rate rhs y-o-y Sizeable fiscal policy support Discretionary fiscal policy and liquidity measures, in of EU GDP 0.4 3.2 4.4 22.1 0 5 10 15 20 25 EU initiatives Member States, EU budgetary measures liquidity support GDPLower inflation reflects oil price and demand drop Inflation breakdown, euro area -1.5 -0.5 0.5 1.5 2.5 3.5 -1.5 -0.5 0.5 1.5 2.5 3.5 12 13 14 15 16 17 18 19 20 21 Energy and unprocessed food pps. Core inflation pps. HICP, all items fo recast Asymmetric recovery GDP Real GDP level in 2021-Q4 compared to 2019-Q4 -3 -2 -1 0 1 2 IT ES NL EE LT HU BG FR DK FI IE BE RO CZ PT EA EU LV SI SE PL SK HR AT DE Asymmetric recovery Investment Real Investment level in 2021-Q4 compared to 2019-Q4 -15 -12 -9 -6 -3 0 3 6 9 12 BG HU ES CZ SK NL SE EU EA PL AT FR HR DK LV BE IT DE FI SI PT LT EE European growth maps 2020-2021 GDP change 2020 GDP change 2021Budgetary outlook 2020- A longer-lasting or more severe pandemic than assumed - Fragmentation of the single market and entrenched structural divergences - Financial instability globally and in the EU - A rise in protectionism Impact of a well-coordinated and financed European recovery plan A faster than expected availability of a vaccine or treatment drug Risks to the outlook are large and tilted to the downside European growth maps 2020-2021 GDP change 2020 GDP change 2021