EU economy could snap post-pandemic gains due to the second wave of coronavirus cases, showed an October survey of Reuters economists.

According to the survey, 90% of economists, or 48 out of 55, see a high or very high risk that the rise in coronavirus cases will hold back the recovery, prompting ECB to act. There is a growing risk of harsher lockdowns in the short term. Sacrificing economic activity in order to stop the spread of infection may lead to a double dip in economy and markets, although contraction in GDP should not be as deep as during the first wave.

Economists predict that QoQ GDP growth in the fourth quarter of 2020 will slow to 2.5% compared to 8.9% in the previous quarter. Only one economist from the survey expected that growth rate will drop to negative but some also said that it is likely in the event of tightening of restrictions in the winter.

Reuters analysis showed that more than 60% of respondents in the October and September polls either cut their quarterly GDP forecasts until the end of 2021 or left them unchanged.

On an annualized basis, the eurozone economy is expected to contract 8.0% this year. In September, economists had forecast a decline of 8.1%, while the International Monetary Fund expects a decline of 8.3%.

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