Eurozone GDP Contracts At Sharpest Rate On Record

The euro area economy contracted at the sharpest pace on record in the first quarter due to the measures taken to contain the spread of coronavirus, the flash estimate from Eurostat showed Friday.

Gross domestic product fell 3.8 percent sequentially in the first quarter, in contrast to a 0.1 percent rise in the fourth quarter of 2019.

This was the biggest fall since the series started in 1995 and in line with the estimate published on April 30.

On a yearly basis, the economy shrank 3.2 percent after rising 1 percent in the fourth quarter. The rate was revised from -3.3 percent. This was the biggest decrease since the third quarter of 2009.

While GDP growth will be even bleaker for the second quarter, it is important to keep daily data in mind at the moment given that this is a recession on steroids, Bert Colijn, an ING economist said.

The economist expects a sharp bounce back in the third quarter.

Eurostat said in the final period of the first quarter, member states widely began coronavirus, or Covid-19, containment measures.

Further, data showed that employment declined for the first time since 2013. Employment was down 0.2 percent in the first quarter from the previous quarter, when it was up 0.3 percent.

Year-on-year, employment growth eased to 0.3 percent from 1.1 percent in the fourth quarter. This was the lowest increase since the first quarter of 2014.

Another report from Eurostat showed that the euro area exports logged its biggest fall since January 2009, as Covid-19 containment measures had a significant impact on international trade in goods.

Exports decreased 8.9 percent on month in March. At the same time, imports fell 9 percent, the biggest drop on record.

Consequently, the trade surplus decreased to a seasonally adjusted EUR 23.5 billion in March from EUR 25.6 billion in February.

On an unadjusted basis, exports fell 6.2 percent year-on-year and imports decreased 10.1 percent in March.

Due to a sharp fall in imports, the trade surplus increased to EUR 28.2 billion from EUR 22.7 billion in the same period last year.

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