Coronavirus: Eurozone GDP plunges by 12.1% in second quarter

Carlos Garcia

Economists had forecast a 35% GDP contraction, reflecting the months when many USA states were locked down to contain the spread of the coronavirus.

Spain plunged into recession in the second quarter after its gross domestic product tumbled by 18.5 per cent due to the coronavirus pandemic, official figures showed on Friday.

While activity picked up again in May and June as states started to reopen, it wasn't enough to undo the damage of the lockdowns.

More than 1.4 million laid-off Americans applied for unemployment benefits last week, the US Labor Department reported on Thursday.

The eurozone economy was already struggling before Covid-19 struck as trade tensions and slowing global growth weighed heavily on its big exporters. Economists had expected a roughly 35% annualized drop, according to Bloomberg data.

France's decline is worse than in Germany, Europe's' top economy, which on Thursday revealed an unprecedented 10.1 percent plunge in GDP for April-June.

The US is now grappling with spikes in COVID-19 cases that have threatened to derail the economic recovery from the pandemic recession.

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Yet with the rate of confirmed coronavirus cases having surged in a majority of states, more businesses being forced to pull back on reopenings and the Republican-controlled Senate proposing to scale back government aid to the unemployed, the economy could worsen in the months ahead.

Because the economy experienced a swift, marked deterioration in the second quarter that's unlikely to be repeated, economists are also looking at another figure: how much the economy shrank from the first quarter to the second quarter, which came in at -9.5% - still, the worst on record by that measure.

The French economy has now shrunk for three consecutive quarters, a recession that analysts say is likely to persist even as spending begins to revive.

INSEE also updated the figure for the first quarter - when lockdowns had just begun to be implemented - to an nearly 6% contraction, from the 5.3% it had previously estimated.

France's economy contracted by a record 13.8 per cent in the quarter ended June, its national statistics institute Insee said yesterday.

Despite the third quarter pick-up, she said eurozone GDP will only return to pre-virus levels by mid-2022.

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