The euro zone economy returned to recession after suffering a 0.6% contraction in GDP between January and March, following the 0.7% drop in the last quarter of 2020, as a result of the impact of the measures to stop the third wave of the pandemic in many countries.
The deployment of vaccines should facilitate the takeoff of the economy for the second quarter, together with the arrival of aid from Brussels. The great blow has been given by the collapse of the German economy.
The saying goes that when the US sneezes the world gets constipated. Well, the same thing happens in the European economy with Germany, the leading power in the euro zone. According to Eurostat, the German economy contracted by 1.7% quarter-on-quarter at the beginning of the year .
In the last quarter of 2020, the economy dodged another fall by surprise, growing by 0.5%. But the new restrictions in the country and its surroundings have returned the country to negative growth rates, dragging the entire area.
Germany was the second country in the euro zone to register a greater drop in GDP in the quarter, only behind Portugal (-3.3%). And it means practically tripling the fall of the entire euro zone. Euro GDP fell 0.6%, confirming the dreaded double recession.
The perfect storm has passed through Germany, in addition to the pandemic. A devastating climate for some sectors, such as construction; Problems in global supply chains, exacerbated by the Suez Canal crisis, terminal for an exporting economy like the German one and the end of the VAT cut have sunk German GDP.
The positive surprise has been France. The second economy in the euro zone was one of the few that has remained standing in the first quarter, along with Belgium and Finland. The explanation is that there has been a rebound in consumer spending to coincide with less demanding restrictions in the period, although now it has returned to take a hard line.
In the case of Spain, GDP registered a contraction of 0.5% in the first quarter, after the stagnation observed in the fourth quarter of 2020. Compared with the first three months of last year, the Spanish economy fell by 4, 3%.
The evolution of the European economy contrasts with the recovery in the US. The American GDP grows at 1.6% quarterly and its economy is launched. The European recovery is mired in delays in vaccination and the arrival of European aid.
But still there are economists optimistic for a radical turnaround. For Bert Colijn, economist at ING, the European economy has shown some “resilience” and adds that “although late, it is ready for recovery, the image of a mediocre eurozone economy will change rapidly”.
All hopes are in vaccines to be able to safely open economies so that tourism can start up and the service sector function normally. According to PMI data, one of the first leading indicators, they already indicated that in March, coinciding with the easing of restrictions in some countries, the GDP of the euro zone had returned to growth, or at least the activity was in phase. expansion.
For the summer, it is also expected that the aid of the reconstruction fund that will give a serious respite to the worst hit countries. But Brussels still has to approve the plans of all the countries and that they ratify the agreements to finance the 750,000 million for Next Generation funds.