A restaurant was closed during a blockade on Mitropoleos Street near 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 tightened social restrictions to contain a second wave of Covid-19 infections, the European Bureau of Statistics said on Tuesday.
A preliminary reading indicates an annual GDP contraction of 6.8% for the euro area in 2020, Eurostat said.
The region experienced a growth rate of 12.4% in the third quarter, as low infection rates at the time allowed governments to partially reopen their economies.
However, the health emergency has deteriorated in the last three months of 2020, with Germany and France moving towards the reintroduction of national blockades. The tightening of social restrictions has again influenced economic performance.
Data released last week showed that Germany grew by 0.1% in the last quarter of 2020. Spain recorded a GDP growth rate of 0.4% over the same period, while France contracted by 1.3 %. The numbers exceeded analysts’ expectations and suggested that some companies had learned how to best deal with blockages.
However, the three-month period also coincided with news of the first approvals of the coronavirus vaccine, which renewed optimism that the pandemic could end sooner than expected. However, the launch has since been slow and bumpy, with economists fearing it will delay the much-needed economic recovery.
“Europe’s vaccination plan fiasco and Brussels’ withdrawal from its confrontation with Britain and AstraZeneca have raised doubts about a European recovery, confirmed the worst caricatures of the bureaucracy and rekindled fears that the European Union would could break up, “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 increased in the new year, amid the spread of new variants of the virus. Governments have thus decided to extend or reintroduce blockages to limit the spread.
In this context, the International Monetary Fund reduced its growth expectations for the euro area in 2021. The fund last week reduced its growth forecast for the region by 1 percentage point to 4.2% this year. Germany, France, Italy and Spain – the four largest economies in the eurozone – have seen their growth expectations fall for 2021.