© Reuters. FILE PHOTO: An worker of German automobile producer Mercedes Benz installs wheel at a A-class mannequin on the manufacturing line on the Daimler manufacturing facility in Rastatt
By Jan Strupczewski
BRUSSELS (Reuters) – The euro zone economic system contracted lower than anticipated within the fourth quarter of 2020 amid pandemic-induced lockdowns, preliminary EU estimates confirmed on Tuesday, however it’s heading for an additional, in all probability steeper decline within the first quarter of this yr.
The European Union’s statistics workplace Eurostat stated that in accordance with its preliminary flash estimate, gross home product within the 19 nations sharing the euro fell by 0.7% quarter-on-quarter, for a 5.1% year-on-year decline.
Economists polled by Reuters had anticipated a 1.0% quarterly fall and a 5.4% annual contraction after a pointy rebound within the July-September interval when the euro zone eased restrictions on journey and leisure after a primary wave of COVID-19 instances.
“Within the first quarter of 2021, the decline is more likely to be considerably steeper. Nevertheless, there is not going to be a stoop just like the one within the first half of 2020. As a substitute, a noticeable restoration is more likely to set in once more from the spring,” stated Christoph Weil, economist at Commerzbank (DE:).
Eurostat preliminary knowledge confirmed the second and third largest euro zone economies, France and Italy, pulled down the general consequence with quarterly GDP declines of 1.3% and a pair of.0% respectively. In the meantime Germany inched up 0.1% from the third quarter and Spain grew 0.4%.
Economists stated the fourth quarter stoop was milder than within the first half of the yr as a result of restrictive measures have been tailored and have been much less extreme than earlier.
“Consider nations like France and Spain, for instance, the place trade and development have remained largely open over the course of the quarter. This has had a really optimistic impact on GDP, particularly as a result of demand for items and development has remained robust regardless of lockdowns in place,” stated Bert Colijn, economist at ING.
“Mobility, the motion of individuals which was largely correlated to GDP development within the first wave, was additionally stronger within the fourth quarter than through the first wave, which additionally supported financial exercise,” he stated. “What additionally helps is that the remainder of the world continues to be open.”
Eurostat stated that, in accordance with its first estimation of annual development for 2020, based mostly on seasonally and calendar adjusted quarterly knowledge, GDP fell by 6.8% within the euro space and 6.4% within the 27-nation European Union.
Eurostat stated this was the deepest annual contraction for the reason that sequence began in 1995. Even in 2009, following 2008 disaster, the contraction was solely a 4.3% decline, Eurostat stated.
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