A restaurant closed during the blockade on Mitropoleos street near Monastiraki square in Athens, Greece, on Monday, November 9, 2020.
Bloomberg | Bloomberg | Getty Images
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, Europe’s statistics office reported Tuesday. market.
A preliminary reading points to an annual contraction of GDP of 6.8% for the euro area in 2020, Eurostat said.
The region recorded 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 worsened in the last three months of 2020, with Germany and France even reintroducing national roadblocks. The tightening of social restrictions has again weighed on economic performance.
Data released last week showed that Germany grew 0.1% in the last quarter of 2020. Spain had a GDP growth rate of 0.4% in the same period, while France contracted 1.3%. The numbers were above analysts’ expectations and suggested that some companies have learned to deal with the blockages as best as possible.
However, the three-month period also coincided with news of the first coronavirus vaccine approvals, which renewed optimism that the pandemic could end sooner than expected. However, implementation since then has been slow and rugged, with economists fearing it will delay the much-needed economic recovery.
“The fiasco of Europe’s vaccination plan and the withdrawal of Brussels from its stalemate with the United Kingdom and AstraZeneca raised doubts about a European recovery, confirmed the worst caricatures of the clumsy bureaucracy and revived fears that the European Union might break up” , Anatole Kaletsky, founder of Gakeval Research said in a note on Tuesday morning.
In addition to the uneven distribution of Covid-19 jabs, the number of daily cases also increased in the new year amid the spread of new variants of the virus. Governments then decided to extend or reintroduce blockages to contain the spread.
In this context, the International Monetary Fund reduced its growth expectations for the euro area in 2021. The Fund reduced 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 – have seen their growth expectations reduced to 2021.