European economy tumbles into worst recession amid Covid-19 crisis

On an annualised basis, EU economies shrank by 14.4%, and eurozone economies by 15%, the sharpest recorded contractions

The European economy tumbled into its worst recession on record in the second quarter, as quarantines in countries across the continent brought business, trade and consumer spending to a grinding halt.

From April to June, gross domestic product fell from the first quarter by 11.9 percent in the 27 member states of the European Union, and by 12.1 percent in countries that use the euro currency, according to figures released on Friday by Eurostat, the bloc’s statistics agency.

On an annualised basis, European Union economies shrank by 14.4 percent, and eurozone economies by 15 percent, the sharpest contractions since statistics started being kept in 1995.

But there were signs that the worst may have passed since then, and that a tentative recovery was gaining some traction as governments unleashed enormous stimulus spending. Lengthy lockdowns, while painful for business and industry, have helped curb a widespread resurgence of the pandemic in most countries, easing reopenings.

The data was especially grim for nations on Europe’s southern rim, which were among the worst affected by the virus and which faced longer quarantine periods than northern European countries.

In Spain, which has had one of Europe’s highest death tolls, the economy shrank by a staggering 22.1 percent from a year ago and by 18.5 percent from the first quarter.

 

France, the eurozone’s second-largest economy, shrank by 19 percent from a year ago and by 13.8 percent from the first quarter; and Italy, the third-largest economy in the zone, contracted by 17.3 percent from a year ago and by 12.4 percent from the first quarter. France is officially in recession, with three straight quarters of contraction.

On Thursday, the authorities reported that the German economy, Europe’s largest, shrank by 11.7 percent from the same period last year and by 10.1 percent from the previous quarter.
 

European Union leaders last week agreed to a landmark stimulus of 750 billion euros, or about $884 billion, to rescue their economies and to anchor a mild turnaround that had started to take hold after lockdowns began to be lifted.

But risks abound as surges in new cases are reported, increasing the possibility of more quarantines.

“The hard part of this recovery is set to start about now,” Bert Colijn, senior economist for the eurozone at ING Bank, said in a note to clients. 

©The New York Times News Service 2020