A new report conducted by the Organisation for Economic Co-operation and Development (OECD) warns that Eurozone economy could shrink by up to 15% this year.
The OECD said that the EU faces an unprecedented downturn due to the pandemic, and the Eurozone economy could shrink between 5.6% and 15.1% by the end of this year.
The report further warned that a second coronavirus wave this autumn will be devastating as the EU will have a “double hit scenario,” with strict new lockdowns which will prolong the global recession.
The OECD report added, “Lockdown measures to suppress the Covid-19 pandemic have led to a major recession.
“If a second pandemic wave takes place later this year, GDP is projected to contract sharply by 11.5% in 2020, and the unemployment rate will exceed 12% by end-2020, despite widespread use of short- time work schemes.”
The second largest economy in the EU, France can expect to shrink between 11.4% and 14.1%, Spain and Italy are also the worst hit economies.
The OECD forecasts that Italy is expected to slump between 11.3% and 14%, whilst Spain could shrink between 11.1% and 14.4%.
Laurence Boone, the OECD’s chief economist, warned the UK will see similar contractions to France, Spain and Italy, and the world economy is “walking a tightrope” due to the real threat of a second wave of the virus.