Gross domestic product for Europe contracted by 11.9 percent during the second quarter, months covering April to June, with the pandemic hurting businesses and industries. Even one of their strongest economies, Germany’s GDP, suffered by a 10.1 percent contraction.
The GDP drop is by record the worst since 1955. Compared to the preceding quarter, it is worse by 3.2 percent. When compared from the 2019’s second quarter, economy fell by 14.4 percent. It was even a steeper drop than the United States’ 9.5 percent drop last Thursday.
Aside from Germany, other large GDP players also dealt with economic slump, including Italy dropping by 12.4 percent, France falling by 13.8 percent, and Spain, facing the worst second quarter, decreasing by 18.5 percent. GDP of 19 countries under the euro currency fell by 3.6 percent in the first quarter, with France, Italy and Spain sinking by 5 percent.
Summer 2020 #ECForecast: A deeper recession with wider divergences.
The euro area economy is forecast to contract by 8.7% in 2020 & grow by 6.1% in 2021. The EU economy is forecast to contract by 8.3% in 2020 & grow by 5.8% in 2021.
Press release: https://t.co/xa0TjpxAiW pic.twitter.com/Kit2oygjEg
— EU Economy & Finance (@ecfin) July 7, 2020
‘Painfully slow recovery’
The second quarter saw the pandemic cause governments to impose lockdowns and restrictions to curb the corona virus. This led to a decrease in economic activity within the region. Further in the time period were some restrictions eased slightly.
In a note, chief Europe economist of Capital Economics, Andrew Kenningham, stated that bouncing back may take a long time, even as economic activities were resuming already. “While parts of the economy have sprung back to life over the past couple of months, the damage already done combined with the current and potential future impact of the virus mean that recovery will be painfully slow,” Kenningham said.
Forecast by European Central Bank estimated last June an 8.7 percent shrinking of the economy for the region this year. However, they are expecting improvement in economic activity in the quarter three. Assumption comes with less restrictions.
Region restrictions and economy
CNBC reported that governments are not planning to fully shut their economies. Government is willing to implement restrictions on social gatherings and strengthening social distancing mandates in order to prevent another wave of viruses.
Earlier in July, leaders of European countries have agreed on creating a recovery fund of 750 billion euros as a way to rebuild economies most affected by the pandemic.