According to a report by Eurostat, the European statistics agency, the size of the eurozone economy fell by 12.1% in the second quarter of this year – this is the biggest fall on record.
The agency also announced that GDP is predicted to have fallen by 12% , with no country being exempt from the negative economic impact of the COVID-19 pandemic this year.
Spain has been hardest hit economically and has seen its economy shrink by 18.5% in recent months. The second largest drop was in Portugal, with a contraction of 14.1%. Portugal imposed strict lockdown measures early on, so has seen a lower fatality rate overall.
The next worse hit EU countries were France and Italy, which also had two of the highest infection rates in Europe. France has reported an economic decline of 13.8% compared to the previous quarter, and Italy’s economy had shrunk by 12.4%.
Of the countries that data was available for, Lithuania’s GDP fell by the least, with a 5.1% drop. This was followed by Germany, which had an economic contraction of 10.1% overall.
Eurostat said, “These were by far the sharpest declines observed since time series started in 1995,” adding that April to June 2020 was “still marked by COVID-19 containment measures in most member states.”
Although some improvement is expected as lockdown restrictions are eased, there are fears that it, in the long-term, the pandemic could lead to an increase in poverty, not just in the EU, but also globally.
Additionally, in May, the European Commission said it feared there could be a “recession of historic proportions” in 2020, and that a recovery plan will be needed to boost economies.
The EU has now predicted that eurozone economies could shrink by up to 8.7% this year overall. A recovery plan is in the process of being implemented, which will include €360 billion in loans and €390 billion in grants.
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