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31 Jul, 2020 11:48

Coronavirus pandemic triggers huge contraction in eurozone economy

Coronavirus pandemic triggers huge contraction in eurozone economy

The 19 euro-area countries experienced the biggest GDP drop on record during the height of the coronavirus pandemic. The eurozone economy shrank 12.1 percent, while the EU economy as a whole contracted 11.9 percent.

The second-quarter preliminary reading is the lowest since records by the region’s statistics office Eurostat began in 1995.

The 19-member bloc that shares the euro currency had experienced a fall of 3.6 percent in GDP during the first quarter of 2020. 

EU’s largest economy Germany contracted by 10.1 percent in Q2, Italy’s GDP sank by 12.4 percent, France’s economy shrank by 13.8 percent, while Portugal slumped 14.1 percent. Spain was hit the hardest, with its GDP nosediving by 18.5 percent. 

The German economy’s 10.1 percent contraction was its largest drop in GDP since the country began keeping quarterly records in 1970. Germany’s GDP fell by 5.7 percent in the aftermath of the 2009 crisis. 

READ MORE: EU agrees ‘historic’ €750bn coronavirus stimulus plan after marathon summit

According to EU Economy Commissioner Paolo Gentiloni, “all European countries” suffered unprecedented consequences due to coronavirus-induced lockdowns.

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Senior economist at the Frankfurt-based ING bank Bert Colijn told the AFP news agency that the drop “doesn't tell us that much about the general state of the economy” due to the unusual circumstances. “It is a shocking drop, but completely understandable as the economy was shut down for a considerable period during the quarter,” he said, adding: “The hard part of this recovery is set to start about now.”

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