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Record 12.1% collapse in Q2 2020 eurozone GDP

Agence France-Presse

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Record 12.1% collapse in Q2 2020 eurozone GDP

A man wearing a face mask walks in front of a store in Ibiza on July 31, 2020. - Spain plunged into recession in the second quarter after its gross domestic product tumbled by 18.5 percent due to the coronavirus pandemic, official figures showed. The business, transport and hotels sector were all badly hit, with a 40 percent drop compared with the first quarter. And tourism, a pillar of the Spanish economy which accounts for 12 percent of GDP, suffered with a 60 percent drop in revenues compared the same period in 2019. (Photo by JAIME REINA / AFP)

AFP

With much of the economy paralyzed by coronavirus lockdowns, the fall is 'by far' the largest since records began in 1995, says Eurostat

The European economy was hit by its sharpest recorded contraction in the 2nd quarter, with gross domestic product (GDP) down 12.1% in the eurozone and 11.9% across the European Union.

The official Eurostat agency said that, with much of the economy paralyzed by coronavirus lockdowns, the fall was “by far” the largest since it began recording the figure in 1995.

“It is a shocking drop, but completely understandable as the economy was shut for a considerable period during the quarter,” said Bert Colijn, senior economist at ING Bank.

“It therefore doesn’t tell us all that much about the general state of the economy, which is usually why one would look at GDP figures in the first place.”

The figures suggest that the decline has been similar in major economies Germany, France, and Italy, but analyst Colijn warned that Spain is facing a “prolonged slump.”

If countries continue to relax their coronavirus measures there could be a fairly rapid recovery, but analysts played down the chance of an immediate “V-shaped” rebound.

“The hard part of this recovery is set to start about now,” Colijn said.

Meanwhile, eurozone inflation rose slightly to 0.4% in July.

The figure is up on June’s 0.3% but is still well off the European Central Bank’s target of just below 2%, according to Eurostat. – Rappler.com

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