The full extent of the impact of Covid-19 on the eurozone and US economy has been laid bare by figures showing shrank by a record.
Eurostat’s, the European Union’s statistical arm, revealed that the contraction in the second quarter. This is when it combines with a smaller fall in the first three months of the year. It had wiped out a decade and a half of expansion, returning the eurozone economy to its level in the mid-2000s.
More on the Eurozone and US economy
Germany, which reported its growth figures on Thursday, was the least bad performer of the eurozone’s “big four” economies. This with a GDP contraction of 10.1% in the second quarter, which means that despite the victory, the economy shrank.
France and Italy
France, second in size only to Germany within the 19-nation single currency area, saw its GDP drop by 13.8%. All while the next biggest economy, Italy, contracted by 12.4%.
In Spain, where concerns about a second wave are most acute, there has been the biggest drop in output in the second quarter. It registered a decline in GDP of 18.5%.
Eurostat said that taken as a whole, the eurozone economy was 15% smaller than it had been a year earlier. The record-breaking drop in April to June. This was the period of 2020 that followed a fall of 3.6% in the first three months of the year and zero growth in the final quarter of 2019.
In the US the record-setting quarterly falls in economic growth. At least when compared to the same time last year. Another 1.43 million Americans filed for unemployment benefits last week, the second week of rises after a four-month decline.
The annualized figure is the largest drop in the quarterly gross domestic product (GDP) – the broadest measure of the economy – since records began in 1945. Economists expect the rate to improve sharply later this year but the outlook has been clouded by the recent rise in infections across the US.
The fall came as large parts of the US economy shut down in March in an attempt to halt the spread of the coronavirus across the US. The closures led to a historic number of layoffs and sent unemployment soaring to levels unseen since the 1930s Great Depression.
All states have now begun to open up to some extent but the virus keeps spreading – more than 150,000 people have now died of Covid-19. As cases rise in California, Florida, Texas, and elsewhere, some states have moved to restrict businesses again to stop the spread, renewing pressure on the US economy.
Unfortunately we are amid growing fears that the Eurozone and US economy recovery is about to be affected by a second wave of the crisis.