NEWS

31.07.2020 | Eurozone disaster: Brussels on alert as GDP plummets - worst drop ever
Source - The Daily Express

Gross domestic product contracted by 11.9 percent in the EU and 12.1 percent in its Eurozone single currency bloc. Spain, Portugal, Italy and France were the hardest hit as the extent of the economic damage caused by coronavirus pandemic shutdowns is revealed. Europe is facing its deepest recession since the Second World War as a result of the measures taken to curb the spread of the deadly disease. The contraction in output across the EU is being shared unequally across its member states, analysts have warned. Ulas Akincilar, head of trading at Infinox, said: “The sharp fall in European economic output recorded in the second quarter of 2020 is striking both for its speed and its universality. “So far every single EU member state to have published its second quarter data has reported a major drop. “Spain and Italy, the two countries hit earliest and hardest by the virus, are now squarely in the eye of an economic storm. “Nevertheless the pain is being shared out unequally. The economic impact is hitting several of the bloc’s most indebted southern nations hardest, while Germany has had more success at containing both the human and economic cost.” Spain recorded a slump of 18.5 percent, the highest decline compared to the previous quarter, followed by Portugal on 14.1 percent and France on 13.8 percent. Germany, the EU’s largest economy, managed to record slightly better figures, with just a 10.1 percent drop in GDP. But experts believe Berlin’s slump was still worse than previously expected, and underlines the challenge faced by European leaders as fears grow over a second wave of infections. The contraction had “wiped out nearly 10 years of growth” but “could have been much worse”, according to Florian Hense, economist at Berenberg. Germany’s statical office blamed drop in GDP on a “massive slump” in exports and imports of goods, and household spending. The double-digit drop across the EU wiped out seven years of steady growth across the bloc. Spain’s economic decline was much worse than previously expected and followed a 5.2 percent slump in the first quarter. Jose Ignacio Conde Ruiz, a profesor of economics at Madrid’s Complutense University, said: “It’s the kind of drop one would see in a war. “The only sector that grew was agriculture.” Italy has been hit by its fourth recession in just over a decade, but Spain’s performance means that the country is less likely to be the worst hit EU economy, as predicted by the European Commission. Jack Allen-Reynolds, from the Capital Economics consultancy, said data suggested Italian economic activity had picked up in July, while the government’s new stimulus package would herald the introduction of wage subsidies and support for the tourism industry.


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