The eurozone’s gross domestic product (GDP) plummeted by a record 12.1 per cent in the second quarter amid the coronavirus pandemic, according to quarter-on-quarter estimates from the EU statistical office Eurostat released on Friday.

Largest GDP decrease since 1995

It is the sharpest GDP decline observed since Eurostat started releasing its figures in 1995 and reveals the damage sustained during three months that saw most of Europe shutter shops, restaurants and factories to curb the spread of the new coronavirus.

According to the flash estimate, economic output in the whole of the European Union dropped slightly less, but also dramatically, by 11.9 per cent.

The figures showed that the coronavirus pandemic has had “unprecented consequences for all European countries,” EU Economy Commissioner Paolo Gentiloni wrote on Twitter.

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The senior official also took the opportunity to make a plug for the recently agreed, but not yet formally signed off, stimulus plan to relaunch the bloc’s virus-stricken economies: “#nextgenerationeu,” his tweet read, the official name for the 750-billion-euro (888-billion-dollar) package.

Similarly, the new estimates prompted Cohesion Commissioner Elisa Ferreira to urge a quick adoption of the package. “To recover and rebound we need #NextGenerationEU to be concluded, approved and implemented,” she said in a tweet, adding: “#NoTimeToWaste.”

The package has been agreed on a political level by the 27 EU leaders, but still needs to be formally adopted. It has been subject to fierce debate between the capitals, with countries trying to strike a balance between their own national interests and the need to stimulate the economies quickly.

Worldwide economic consequences

Countries worldwide have imposed coronavirus-related restrictions, such as lockdowns or travel restrictions. With tourism largely grinding to a halt and trade being severely affected, the global economy is expected to see one of the worst recessions since the World War II.

Of the figures published for 10 countries in the bloc, Spain saw the sharpest drop: its GDP dropped by 18.5 per cent.

The previous quarter saw a drop of 3.6 per cent in the eurozone and 3.2 per cent in the EU.

Governments and experts worldwide have raised alarm about an economic recession of historic dimensions.

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On Thursday, the United States announced a grim 32.9-per-cent contraction of its economy.

Eurostat’s flash estimate is based on “data sources that are incomplete and subject to further revisions under the Covid-19 containment measures.” A new, more complete, estimate will be released mid-August, the office said.

Compared to the same period last year, GDP dropped even further: by 15 per cent in the eurozone and 14.4 per cent in the EU.

At 0.4 per cent, meanwhile, the inflation rate in July stayed well-below the 2 per cent that the European Central Bank aims for to strike a balance between growth and stability.

Source: ednHUB / Deutsche Presse-Agentur