The Eurozone economy shrinks at an alarming rate.
Until now, the economy shrank at a rate that was not seen even during the 2008-2009 financial crisis. The GDP for the first trimester contracted by 3.8%.
Today was a grim day for Europe, as a handful of countries reported changes in the unemployment rate, in the Consumer Price Index, and so on. A report from Oxford Economics shows that the countries which had the most stringent measures suffered or will suffer the most significant drop in GDP during the first quarter.
The frontrunner was France when earlier today it released the Consumer Spending report. The number reached a high unseen since 1980 when the report began. Consumer spending fell by 18% in just one month, according to INSEE.
The consumption of manufactured goods fell to -42.3% from a previous -0.6%. Also, the energy expenditure decreased to -11.4% from -0.9%. The only increase was registered on food consumption to 7.8% from -0.1%.
The fall in consumption for the quarter ended in March 2020 is due to the lockdown measures implemented since the middle of the month.
If the Eurozone economy shrank by 3.8%, the Spanish economy contracted 5.2% in the first three months of the year. As France set records for its index, so did Spain, this being the most significant decrease since 1995 when the data series started.
Locking down the country has had, at least in part, benefits on the pandemic but it has taken a serious toll in the economy.
The German Labor Office reported earlier today that the number of people who don’t have a job since the virus became pandemic increased by 373,000 to 2.639 million in April. The unemployment rate reached 5.8%. In just one month from March to April, more than 10 million started looking for short-time work. The number is bigger than the one recorded during the 2008-2009 financial crises when 3.3 million people applied for a short-time job. Although they asked for the short-time work scheme, nothing guarantees that all of them will benefit from it.
Italy joins France in recession. The ISTAT report shows a GDP contraction of 4.7% for the first quarter of 2020. It is the second consecutive quarter when Italy's GDP shrinks – during the last quarter of 2019, it reported a contraction of 0.3%.
It is the first significant contraction since the report started collecting data in 1995.
Like in Spain's case, the severe measures took against the virus had a word in this.
It seems like Austria is the least hit by the contraction, reporting today a shrinkage of 2.5% for the first quarter. It is not as bad as in neighboring countries, but analysts say that it is mid-way recession.
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Sources: theguardian.com, forexfactory.com, forexlive.com, istat.it, bbc.com, news.trust.org
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