A restaurant closed during the closure on Mitropoleos Street, next to Monastiraki Square in Athens, Greece, on Monday, November 9, 2020.
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LONDON – The eurozone economy fell 0.7% in the last quarter of 2020 as governments stepped up social restrictions to contain a second wave of Covid-19 infections, it said on Tuesday the European Statistical Office.
A preliminary reading points to an annual GDP contraction of 6.8% for the euro area in 2020, Eurostat said.
The region had experienced a growth rate of 12.4% in the third quarter, as low infection rates at the time had allowed governments to partially reopen their economies.
However, the health emergency deteriorated in the last three months of 2020, with Germany and France even reintroducing national closures. 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 a GDP growth rate of 0.4% in the same period, while France contracted a 1.3%. The figures exceeded analysts ’expectations and suggested that some companies had learned to deal with blockages as best they could.
However, the three-month period also coincided with the news of the first coronavirus vaccine approvals, which renewed optimism so that the pandemic could end earlier than expected. However, since then deployment has been slow and bumpy, and economists fear it will delay the much-needed economic recovery.
“The failure of the European vaccination plan and the withdrawal of Brussels from its confrontation with the United Kingdom and AstraZeneca have raised doubts about the European recovery, confirmed the worst caricatures of the baffling bureaucracy and revived fears that the European Union it can be broken, ”Gakeval Research founder Anatole Kaletsky said in a note Tuesday morning.
In addition to the uneven distribution of Covid-19 strokes, the number of daily cases has also increased in the new year amid the spread of new variants of the virus. Thus, governments have decided to expand or reintroduce blockades to contain the spread.
In this context, the International Monetary Fund has reduced its growth expectations for the euro area in 2021. Last week, the Fund cut the region’s growth forecast by one percentage point to 4.2% this year. Germany, France, Italy and Spain, the four largest economies in the eurozone, saw their growth expectations for 2021 lower.