LUXEMBOURG / PARIS / ROME / MADRID (dpa-AFX) – The corona crisis has seen drastic slumps in leading economies Euro zone triggered. France is suffering from the worst economic downturn in 70 years because of the economic consequences of the pandemic. Strong economic downturns were also reported from Spain and Italy on Thursday. Economic output in the entire euro zone shrank by 3.8 percent in the first quarter, according to the European Statistics Office. It is the strongest decline in the currency area since the beginning of the 1995 surveys.
In some cases, the economic downturn was much more pronounced than analysts had feared. France, which is the second largest economy in the euro zone, is one of the worst hit. In the first three months of the year, French economic output shrank by 5.8 percent compared to the previous quarter. The decline in gross domestic product (GDP) is the strongest since the beginning of the survey in 1949. The extent even exceeded the slump of 1968, said the national statistics office Insee. Back then, strikes had paralyzed the country’s economy.
Around the same time as the French data, key figures from Spain also showed the extent of the economic damage caused by the corona virus. For the three months to March, the national statistics institute in Madrid reported a 5.2 percent drop in economic output. The setback in Spain was worse than analysts had feared.
In addition to France and Spain, Italy was hit hard by the virus pandemic. In the third largest economy in the eurozone, gross domestic product (GDP) fell by 4.7 percent in the first quarter. According to the Istat statistical office on Thursday, this is the sharpest drop in economic output since the beginning of the 1995 surveys.
Italy is particularly affected by the aftermath of the corona pandemic. The number of infections had risen sharply, particularly in the economically strong regions of the north, and the government in Rome had to introduce tough restrictions in March to combat the spread of the virus, which paralyzed essential parts of the Italian economy.
Germany, the largest European economy, is also suffering from the crisis. The Federal Government anticipates a decline in gross domestic product of 6.3 percent for the whole of 2020 and thus the largest slump since the Federal Republic was founded. According to the forecasts published on Wednesday, the worst for the economic development is still to come. Due to the massive restrictions in the fight against the virus, the federal government does not expect the most serious slump until the second quarter. The economy is expected to pick up again in the second half of the year.
Expert Christoph Weil from Commerzbank pointed out the “particular uncertainty” in the estimate of economic performance in the first quarter. “So far, we know very little about the slump in the economy in the second half of March,” noted Weil.
In general, further easing of the containment measures should lead to positive growth effects again in May and June. “However, the torn growth gap should not be able to be compensated for so quickly,” commented Chief Economist Thomas Gitzel from VP Bank on the consequences of the economic downturn. “It will take months for the economy to recover somewhat from the hardships.” / Jkr / jsl / stk