The coronavirus pandemic has plunged the eurozone economy into a historic recession, figures published on Friday showed.
Eurozone gross domestic product fell 12.1 per cent between the first and second quarters of 2020, the biggest drop on record, following a decline of 3.6 per cent in the first quarter. A recession is defined as two successive quarters of negative growth.
France, Italy and Spain all reported double-digit quarter-on-quarter falls in economic output in the three months to June, in figures also released on Friday.
Both the US and Germany on Thursday reported a loss of about a tenth of their gross domestic product in the second quarter.
Spain’s economy was worst hit, with its GDP declining 18.5 per cent, according to preliminary estimates by its National Statistics Institute.
The fall was worse than analysts had expected and followed a contraction of 5.2 per cent in the first quarter, wiping out seven years of growth since the country’s last recession and leaving output at levels last seen in 2002.
“It’s the kind of drop one would see in a war,” said José Ignacio Conde Ruiz, a professor of economics at Madrid’s Complutense University. “The only sector that grew was agriculture.”
France suffered its largest contraction in output since the second world war. Its GDP was down 13.8 per cent quarter on quarter in the three months to June, although the fall was slightly smaller than analysts anticipated.
This marked the country’s third consecutive quarter of contraction, according to the official statistics agency Insee, which also revised its figure for France’s first-quarter contraction down by 0.6 percentage points, to a contraction of 5.9 per cent.
Italy’s GDP fell 12.4 per cent between the first and the second quarter, and by 17.3 per cent year on year, its national statistics office said — the steepest contraction in 25 years but slightly better than analysts had expected.
The country is mired in its fourth recession in just over a decade and its economy had already been shrinking before the pandemic hit. The second-quarter contraction took output back to levels last seen in the early 1990s.
Italy’s official forecast is for a full-year GDP contraction of 8 per cent but Roberto Gualtieri, the economy minister, said this could be revised lower.
However Spain’s performance means that Italy is less likely to be the worst hit European economy, as European Commission forecasts had previously suggested.
Jack Allen-Reynolds, at the consultancy Capital Economics, said real-time data suggested that Italian economic activity had continued to pick up in July, while the government announced new stimulus measures which are likely to be spent on extending wage subsidies and supporting the tourism sector.
By contrast, the fallout from the initial lockdown is likely to be compounded in Spain by the fresh rise in new coronavirus cases that threatens the reopening of its crucial tourism sector.
Barring another full lockdown, Spain should see a double-digit rebound in GDP in the third quarter, Mr Conde Ruiz said — but he added that, even so, it would still be “a disaster” compared with the same period in 2019.
Additional reporting by Ian Mount in Madrid