William Malcolm

EU Economy Shrank 6.4% In 2020

The European Union’s economy contracted by 6.4 percent last year, mainly due to measures against the new coronavirus’s spread. In the eurozone countries, the decline was even more pronounced, at 6.8 percent. This was announced today by Eurostat in its first quick estimate. The full-year decline was most pronounced until 1995 when Eurostat began monitoring these data. The economy also declined in the fourth quarter, but the slump was more modest than estimated.

According to the Czech Statistical Office, the European Union thus performed worse than the Czech Republic, whose economy fell by 5.6 percent last year. In the fourth quarter, compared to the previous three months, the Czech economy grew by a surprising 0.3 percent, while analysts expected a decline.

In 2019, the euro area gross domestic product (GDP) grew by 1.2 percent, the slowest growth in six years. The EU-wide economy grew by 1.5 percent the year before last.

According to a preliminary estimate, the Italian statistical office said in a separate report today that the Italian economy fell by 8.8 percent last year, the highest since World War II. However, it did better than the government expected, which expected a decline of nine percent.

According to a local statistical office report, the Portuguese economy contracted by 7.6 percent last year, the most since 1936. Although the decline was more modest than the 8.5 percent expected by the government, it is almost double compared to a drop of 4.1 percent in 2012 when the country had to implement an austerity program for international aid.

In the fourth quarter, the euro area economy contracted by 0.7 percent compared with the previous three months and 5.1 percent year on year. According to Reuters, analysts expected a quarter-on-quarter decline of one percent and a year-on-year decline of 5.4 percent. At the end of the year, the entire EU fell by 0.5 percent compared to the previous quarter and 4.8 percent year on year.

Of the individual member states for which data are already available, Austria recorded the highest quarter-on-quarter decline, by 4.3 percent. The Italian economy fell by two percent, the French by 1.3 percent. By contrast, Lithuania’s economies grew the most, by 1.2 percent, and Latvia, where growth was 1.1 percent. The German economy, the largest in Europe, grew by 0.1 percent and the Spanish economy by 0.4 percent. But year on year, all countries saw a decline.