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Economic Report: Three years of eurozone economic growth wiped away as ECB’s Lagarde forecasts big drop for the year

Three years of the eurozone economy have been wiped away, and it is likely going to get worse. Read More...

Three years of the eurozone’s economic activity have been wiped away, and it is likely going to get worse.

Eurostat reported eurozone first-quarter GDP fell 3.8% compared with the fourth quarter. European data is reported on a quarter-on-quarter basis, so on an annualized basis, the economy fell 14.4%, worse than the U.S. gross domestic product decline of 4.8%.

“In level terms, real GDP is back to its level three years ago, illustrating the scale of the hit to economic activity,” said economists at Citi.

Separately, France reported a 5.8% decline, Spain reported a 5.2% drop and Italy reported a 4.7% decline after also contracting in the fourth quarter.

Those three countries have been hardest hit from the coronavirus crisis, in terms of confirmed cases, in Europe.

Economists are expecting still worse to come.

“The gradual, tentative lockdown exit path laid out by Prime Minister Philippe supports our base case of a shallow recovery,” said François Cabau, an economist at Barclays who forecasts French GDP to drop 11.7% in the second quarter.

Related:As France and Spain unveil lockdown easing plans, here’s a look at what steps European countries have taken

At a press conference, European Central Bank President Christine Lagarde said the eurozone economy could fall between 5% and 12% this year.

While stark, so are other forecasts — the International Monetary Fund in April said the eurozone economy would fall 7.5% this year.

The Stoxx Europe 600 SXXP, -0.62% extended losses, falling 1%. The euro EURUSD, +0.21% slipped 0.3% to $1.0837.

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