THE STATE OF THE EUROPEAN UNION REPORT. Europe in a period of transition

THE STATE OF THE EUROPEAN UNION 74 period under review, experienced an increase in its risk rate up to 2014, which it was only able to reduce in part; since then, it has remained in the group of EU countries where the impact is above average. An even greater shock: the COVID-19 pandemic The negative record for the decline in GDP that was set during the global financial and economic crisis of 2009 was beaten in 2020: in response to measures to contain the spread of the virus, GDP in the EU decli- ned by -0.6 percent (euro area: -6.4 percent). A supply shock resulting from the first lockdown on economic and movement activities in spring 2020 was followed by a severe demand shock caused by a reduction in consump- tion, investment and export opportunities. This pattern was repeated in further lockdowns, albeit with varying effects on sectors and regions, depending on the trajec- tory of the waves of infection and political responses to them. The second quarter of 2020, with a decline of -11.1 percent compared to the previous quarter, marked the low point of the economic downturn in the EU. In the third quarter of 2020, the economy grew again by 11.7 percent before contracting again by -0.5 percent (Q4 2020) or -0.1 percent (Q1 2021) in the course of the second wave of infection during the winter months. The European Commission is projecting growth of 1.3 percent in the second quarter of 2021 and, if vaccina- tion continues at a steady pace and there are no serious disruptions to the economy and mobility caused by new virus mutations, a substantial improvement in growth in the EU and euro area is expected in 2021 (4.8 percent) and 2022 (4.5 percent). According to projections from July, there should be a return to pre-crisis levels of GDP growth already in the fourth quarter of 2021. However, some Member States – Spain, Italy and Portugal – will not be able to close the gaps in their output until the end of 2022 (European Commission, 2021a). The double-dip crisis has left its mark on the labour market: in the second quarter of 2020, the employment growth rate in the EU fell by -2.8 percent compared to the previous quarter, then increased again slightly (by 0.9 percent in Q3 and 0.4% in Q4 2020) before falling again by -0.2 percent in the first quarter of 2021. In line with the severity of the economic downturn, the employment rate for the 20–64 age group declined the most in the second quarter of 2020, hitting 71.7 percent compared to a pre-crisis level of 73.2 percent in the fourth quarter of 2019. The sharpest decline in the same period was in the employment rate for the 15-24 age group (from 33.5 percent to 30.5 percent). This was reflected in the unem- ployment rate for the 15-74 age group, which peaked at 7.6% in the third quarter of 2020 (euro area: 8.5 per- Table 4. Risk of poverty and social exclusion as a percentage of population, selected countries and years 2009 2012 2016 2019 Romania 43.0 43.2 38.8 31.2 Italy 24.9 29.9 30.0 25.6 Spain 24.7 27.2 27.9 25.3 Estonia 23.4 23.4 24.4 24.3 EU27 23.3 24.8 23.5 21.4 Sweden 17.8 17.7 18.3 18.8 France 18.5 19.1 18.2 17.9 Germany 20.0 19.6 19.7 17.4 Finland 16.9 17.2 16.6 15.6 Source: Eurostat.