Corona crisis throws the euro zone back into 2005!

The cross-border corona lockdown led to a 12.1 percent quarter-on-quarter decline in gross domestic product (GDP) in the euro zone in the second quarter. This slump is not only historically high. GDP is now even only at the level of 2005! 15 years of economic activity have been set back within only two quarters. Despite the expected recovery, some of which will be strong, it will take some time to make up for this setback.
A look at the large member states, for which initial calculations or estimates are already available, also shows the drama of the corona recession. In the second quarter of 2020 all countries had to record double-digit declines in quarterly rates. The German economy was the best performer. Here, the minus was 10.1 percent, in Italy -12.4 percent, in France -13.8 percent and in Spain even -18.5 percent. These were all unprecedented declines in economic output and dramatic cuts in economic activity that set the countries far behind.
However, this is probably the first time that the low point of the current crisis has been passed. Survey-based indicators such as the purchasing managers‘ indices have already signalled an improvement in the economic situation since May. Sales figures from the retail trade and production figures from industry also show that the start of the easing measures is leading to a renewed, in some cases strong, upward trend. Fiscal measures in individual countries and at the EU level will also provide support. In addition, the loss of jobs has been comparatively low so far. The ample use of short-time work cushions a lot. The ingredients for an upswing are thus in place.
In fact, there are many signs of a decent recovery. Nevertheless, the virus remains with us for the time being, and with it the limitations of many service sectors in gastronomy, accommodation and transport. In addition, the other economic risks such as brexite or the international trade disputes should not be forgotten. All in all, this is more than just sand in the economic gears, which is slowing down the economic recovery. For the year 2020, EMU is therefore expected to see a decline in gross domestic product of around 9 percent. And that is only if a second wave and another lockdown can be avoided.

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