The economic researchers from the Munich Ifo Institute and the ETH Zurich see the euro zone slipping into recession in the coming months and warn of a debt crisis. Economic output is likely to have shrunk by 2.3 percent in the first quarter – a further slump of 10.5 percent is expected in the current second quarter, they said today. For the third quarter, the researchers then expect 8.7 percent growth compared to the previous quarter.
“There is little chance that the pandemic will weaken earlier than expected. A resurgence of the European debt crisis on a large scale therefore poses a not negligible risk to the forecast, ”said the two institutes.
The fluctuations in industrial production in the euro countries are particularly severe. It should already have fallen by 4.4 percent in the first quarter and will even drop by 18 percent in the second quarter. Researchers expect growth of 19 percent in the third quarter.
In private consumption, they expect a decline of 3.3 and 13.6 percent in the first two quarters and an increase of 12 percent in the third quarter, with investments a decrease of 2.3 and 10.0 percent and then an increase of 10.4 percent.
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