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The euro area economy is expected to contract by 1% in 2020 because of the coronavirus outbreak, Reuters reported on Monday, citing an internal European Commission document.

“The COVID-19 crisis is estimated to have a very large detrimental economic impact on the EU and euro area,” the document read. 

“The direct impact through all channels is estimated to reduce real GDP growth in 2020 by 2.5 percentage points compared to a situation where there would be no pandemic,” the European Commission explained. “Given that real GDP growth was forecast to be 1.4% for the EU in 2020, this would imply it could fall to just over -1% of GDP in 2020, with a substantial but not complete rebound in 2021.”

Market reaction

The EUR/USD pair largely ignored this headline and was last seen trading at 1.1170, adding 0.57% on a daily basis.

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