The good news for Europe is that the worst of the pandemic is beginning to ease. This week deaths in Italy hit a nearly two-month low. And the German leader Angela Merkel announced that schools, day care centers and restaurants would reopen in the next few days.
But the relief could be short-lived. The European Commission released projections on Wednesday that Europe's economy will shrink by 7.4 percent this year. A top official told residents of the European Union, first formed in the aftermath of the Second World War, to expect the "deepest economic recession in its history," according to The New York Times.
To put this figure in perspective, the 27-nation bloc's economy had been predicted to grow by 1.2 percent this year. In 2009, at the back of the global financial crisis, it shrank by 4.5 percent.
It's a grim reminder that even if the virus dissipates, the economic fallout could pressure the world economy for months, if not years.
In China, where the outbreak has subsided in recent weeks, the factories that power the global supply chain have been fired up. But with few global buyers for its goods, its economy has been slow to recover.
In the United States, where the growth of new cases in the hardest-hit areas shows signs of slowing and there is a push to lift lockdowns, there are also signs that a recovery may be elusive. The government on Friday is set to release the monthly employment report, and some forecasts predict a loss of more than 20 million jobs in April – a number that would wipe out a decade's worth of job gains.
The European Union, home to 440 million people, is the United States' No. 1 trading partner, and China's second-largest. It's the biggest foreign investor in sub-Saharan Africa and other parts of the developing world.
A prolonged European recession, a second wave of the virus or an anemic economic recovery would spell added misery for many Europeans, and hurt companies, banks and people the world over. The crisis is also reigniting political divisions between a wealthier north and a poorer south, threatening to break the brittle balance between divergent nations with inextricably linked economies.
A recovery will probably start unevenly in the second half of the year, Paolo Gentiloni, European commissioner for economy, said at a news conference after the release of the forecast, which comes out four times a year. But by the end of 2021 the countries of the European Union will be in worse shape than they were just two months ago, before the coronavirus started ripping through the continent. U.S. gross domestic product fell at a 4.8 percent annual rate in the first three months of the year, and some economists believe it will contract at an annual rate of 30 percent or more in the current quarter.
"The danger of a deeper and more protracted recession is very real," the head of the commission's economic unit, Maarten Verwey, said in the forecast's foreword.
A resurgence of the virus after the end of lockdowns would shave a further 3 percentage points off economic performance this year, he said.
The economies of Italy and Spain, two of the countries hardest hit by the disease, will most likely shrink by over 9 percent each this year, and Italy's economy will be particularly slow to recover, Mr. Gentiloni said.