Eurozone suffers record slump as coronavirus lockdown reverses growth

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A rapid 3.8% fall in output is steeper than expected but an even bigger slump is forecast for April-June quarter

Output of the 19 countries in the eurozone slumped by a record 3.8% in the first three months of 2020 as the spread of the Covid-19 pandemic had a rapid and hefty impact on growth across Europe.

The EU’s statistical agency eurostat reported an even bigger fall in gross domestic product (GDP) in the quarter ending in March than the financial markets had been expecting.

Related: Eurozone shrinking as Covid-19 lockdowns push Italy and France into recession - business live

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Belgium | The Guardian

Output of the 19 countries in the eurozone slumped by a record 3.8% in the first three months of 2020 as the spread of the Covid-19 pandemic had a rapid and hefty impact on growth across Europe.

The EU’s statistical agency eurostat reported an even bigger fall in gross domestic product (GDP) in the quarter ending in March than the financial markets had been expecting.

With countries only locking down their economies towards the end of the first quarter, analysts are braced for an even bigger slump in the April-June period.

Of the individual eurozone countries publishing data, France said its economy had contracted by 5.8% in the first quarter, the steepest decline since modern records began in the late 1940s.

Spain, one of the countries most seriously affected by Covid-19 reported a quarterly drop of 5.2%, while Belgian and Austrian GDP fell by 3.9% and 2.5%, respectively.

Germany did not release its growth figures but the effects of the pandemic on the eurozone’s biggest economy were underlined by a 373,000 increase in unemployment and a jump to 10.1 million in the number of workers on reduced hours in April.

The eurozone was barely growing ahead of the Covid-19 shock, registering expansion of 0.1% in the final three months of 2019.

A recession is technically defined as two successive quarters of falling output, and analysts said it was now certain that the eurozone would suffer its biggest slump since its creation at the end of the 1990s.

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The eurozone’s contraction in the first quarter was far more pronounced than that recorded by the US. On Wednesday, the US commerce department said the GDP of the world’s biggest economy had fallen by an annualised 4.8% between January and March, equivalent to a quarterly decline of just over 1%.

Andrew Kenningham, European economist at the consultancy Capital Economics, said the size of the hit to eurozone GDP should embolden the European Central Bank to step up its support for growth. “The blizzard of depressing economic data released on Thursday morning confirms that the eurozone economy was in freefall at the end of March, with GDP dropping by a record amount throughout the region.”

Bert Colijn, eurozone economist for ING bank, said: “France and Spain have been among the most strict in terms of lockdowns and hence their economies have suffered more. This would suggest that a country like Germany has experienced a smaller than average contraction.”


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