COVID-crisis and economic growth: Tendencies on potential growth in the European Union

Abstract The main objective of this paper is to identify the impacts COVID-crisis on growth, in particular growth potential European Union (EU), context a broader analysis. quantitative analysis underlying focuses financial and economic (“Great”) recession 2008–2009, subsequent recovery period COVID-crisis. We provide detailed overview some mechanisms growth. likely have direct impact level output. A decrease investments labour market hysteresis may long-lasting effects former would negative productivity. This can lead increased inequalities effect social cohesion. future development divergences among EU Member States particularly important. Their possible intensification could disrupt functioning euro area internal market. lasting source be productivity . Its decisive structural factor dynamism total (TFP). There are large differences with regard performance States. Narrowing output gaps vis-à-vis front-runners through deep reforms key raising potential. cleansing crises, which force change resource reallocation, also create new opportunities for TFP