A restaurant will be closed on Monday, November 9, 2020 during lockdown on Mitropoleos Street next to Monastiraki Square in Athens, Greece.
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LONDON – The euro-zone economy fell 0.7% in the last quarter of 2020 as governments stepped up social restrictions to stem a second wave of Covid-19 infections, the European statistics office said Tuesday.
A preliminary reading points to an annual contraction of GDP of 6.8% for the eurozone in 2020, Eurostat said.
The region experienced a growth rate of 12.4% in the third quarter, as the then low infection rates had allowed governments to partially reopen their economies.
However, the health emergency worsened in the last three months of 2020, with Germany and France going so far as to reintroduce national lockdowns. The tightening of social restrictions again weighed on economic performance.
Data released last week showed that Germany grew by 0.1% in the last quarter of 2020. Spain experienced GDP growth of 0.4% in the same period, while France contracted by 1.3%. The numbers exceeded analysts’ expectations and suggested that some companies had learned how to best handle lockdowns.
Nonetheless, the three-month period also coincided with news of the first approvals of the coronavirus vaccine, renewing optimism that the pandemic could end sooner than expected. However, the rollout has been slow and bumpy ever since, and economists fear it will delay much-needed economic recovery.
The fiasco of Europe’s vaccination plan and Brussels’ withdrawal from its standoff with the UK and AstraZeneca have cast doubts about a European recovery, confirmed the worst caricatures of clumsy bureaucracy and revived fears that the European Union could fall apart Anatole Kaletsky, founder of Gakeval Research said in a note Tuesday morning.
In addition to the uneven distribution of Covid-19 injections, the number of daily cases has also increased in the New Year due to the spread of new variants of the virus. Governments have therefore decided to extend or reintroduce lockdowns to limit the spread.
In this context, the International Monetary Fund has lowered its growth forecasts for the euro area in 2021. The fund lowered its growth forecast for the region by 1 percentage point last week to 4.2% this year. Germany, France, Italy and Spain – the four largest economies in the eurozone – saw their growth expectations for 2021 slashed dramatically.