THE eurozone's economy will contract 5.5pc this year due to the effects of the coronavirus pandemic, according to a survey of professional forecasters published by the European Central Bank (ECB).
But they are expecting the eurozone to rebound next year, predicting its gross domestic product will jump 4.3pc before tapering to more modest growth of 1.7pc in 2022.
The expectations are in stark contrast to the pre-pandemic predictions made by the forecasters, who are not affiliated to the ECB.
The previous survey had pointed to 1.1pc GDP growth this year for the eurozone, 1.2pc in 2021 and 1.4pc in 2022.
The forecasters also reckon that unemployment in the eurozone will hit 9.4pc this year, 8.9pc next year and 8.4pc in 2022.
That compares to previous expectations of 7.5pc, 7.4pc and 7.3pc for 2020, 2021 and 2022 respectively.
Their expectations for the unemployment rate in the longer term have been revised up by 0.4 percentage points, to 7.7pc.
The pace of inflation is also set to fall, according to the forecasters.
They estimate that the harmonised index of consumer prices (HICP) inflation rate will be 0.4pc this year, 1.2pc in 2021 and 1.4pc in 2022.
They had previously forecast rates of 1.2pc, 1.4pc and 1.5pc respectively for each of the years. However, their average long-term inflation expectations remain at 1.7pc.
The European Commission is set to publish its economic forecasts this week for member states.
In its last forecast, published in February and before the coronavirus had been categorised as a pandemic, the Commission had predicted Ireland's economy would grow 3.6pc this year.
Last month, the International Monetary Fund forecast Ireland's gross domestic product will decline 6.8pc this year, while unemployment is expected to average 12.1pc.
It believes the economy will grow again in 2021, with unemployment falling to 7.9pc.
Meanwhile, German factory output shrank at the fastest rate on record in April and firms in the export-oriented sector cut jobs at the fastest pace in almost 11 years, as the new coronavirus crushed demand, a survey showed yesterday.
That sent IHS Markit's Final Purchasing Managers' Index (PMI) for manufacturing, which accounts for about a fifth of Europe's largest economy, falling to 34.5, the lowest reading since March 2009, from 45.4 in March.
Additional reporting: Reuters