(ATF) A sharp contraction in the German economy has thrown the eurozone into a double-dip recession.
The 19-member grouping of European Union nations posted a 0.6% drop in GDP during the first quarter through March, according to Eurostat. That followed a 0.7% decline in the three months ended December. The technical definition of a recession is two consecutive quarters of contraction.
The region’s economy declined 0.4% and 0.5% in the first and second quarters, respectively, of last year.
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The slump was most marked in Germany, which saw its economy slide 1.7% after climbing 8.7% and 0.5% in the previous two quarters. France, which began its lockdowns later than much of the the rest of Europe, saw its economy grow 0.4%.
“The coronavirus crisis caused another decline in economic performance at the beginning of 2021,” Germany’s federal statistical office said. “This affected household consumption in particular, while exports of goods supported the economy.”
The eurozone’s plight is in stark contrast to the 6.4% growth posted in the US and China’s 18.3% annual expansion.
Europe has been hit hard by a second and third wave of the coronavirus pandemic, with multiple attempts to reopen the economy cut short by new outbreaks.
More recent data has given Europeans confidence that the recession will be short-lived, however, with surveys showing that manufacturing is now booming.
And with the vaccination campaign finally getting into swing, pent-up demand is expected to follow as Europeans begin to spend more in shops, at reopened restaurants and on tourism.
The EU's slow-moving recovery plan is also expected to finally get on track, giving a much needed boost to southern countries crushed by the pandemic, such as Italy or Spain.
The European Central Bank expects growth to be 4% this year and 4.1% in 2022.
“We do see a good recovery throughout the rest of this year, so that is very much, if you like, a two-sided story,” Philip Lane, ECB chief economist aid on Dagens Industri TV, as reported in the Financial Times. “Looking backwards, the initial weeks have been very tough for many firms... and the fact we’re rebounding from the worst of it does not mean there’s a full recovery.”
- With reporting by AFP