Coronavirus: Eurozone GDP plunges by 12.1% in second quarter

7 2020 shows Fifth Avenue in New York's Manhattan

7 2020 shows Fifth Avenue in New York's Manhattan

In the first quarter of this year, when the U.S. officially entered recession in February, the economy shrank 5 percent from the same period a year ago. A recession is commonly defined as two consecutive quarters of a contraction in GDP.

Many economists note that the economy can't fully recover until the coronavirus is defeated - a point stressed Wednesday at a news conference by US Federal Reserve Chair Jerome Powell.

The restrictions imposed under the state of emergency, which began in mid-March, were only gradually lifted in May and June.

Unsurprisingly given the lockdowns and travel restrictions hitting worldwide tourism, there was a almost 46% drop in transportation and a 57% drop in the restaurant and hotel sector.

Investment fell by a greater amount - nearly 18%. The data also showed drops in consumer investment on single-family housing and transportation equipment, and a drop in business inventory investment from retail companies such as motor vehicle dealers.

The government has forecast a contraction of 9.2 per cent in 2020, surpassing the fall during Spain's 2008-2013 financial crisis, and has said it expects 6.8 per cent growth in 2021.

CNN Business reported that the Q2 drop "was almost four times worse than during the peak of the financial crisis, when the economy contracted 8.4% in the fourth quarter of 2008", though noted that the United States "only began keeping quarterly GDP records in 1947, so it's hard to compare the current downturn to the Great Depression". Earlier this week, the head of Bank of France (BdF), Villeroy de Galhau, said that he expects the economy to drop by 10 percent for the whole of 2020 and does not believe it will return to pre-crisis levels until early 2022.

The economy's collapse in the April-June quarter, stunning in its speed and depth, came as a resurgence of the viral outbreak has pushed businesses to close for a second time in many areas.

In the first quarter, growth had fallen by 5.2 percent, the Institute of National Statistics said (INE).

Spain, where the virus has killed more than 28,400 people, has been struggling with a surge of new infections that have sparked European travel warnings and a British quarantine move which has damaged the tourism industry's fledgeling recovery. The broader 27-country European Union, not all of whose members use the euro, saw output sag 11.9%.

The figures suggest that the decline has been similar in major economies Germany, France and Italy, but analyst Colijn warned that Spain is facing a "prolonged slump".

Unemployment hit 15.3 per cent by the end of June and is expected to reach 19 per cent by the year's end, the government says, although the International Monetary Fund sees it rising to as much as 20.8 per cent. More than one million laid-off workers have applied for unemployment benefits for 19 straight weeks.

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