The recession in the euro zone is confirmed. This Friday, several national institutes released their growth estimates for the first quarter of 2020. At the same time, Eurostat released an estimate of GDP and employment for the first three months of the year across Europe. One thing is certain: the general finding is worrying to say the least.
Read also: Recession: why France dives more than its neighbors
In detail, according to the European Institute of Statistics, the Union's GDP decreased by 3.3% compared to the previous quarter and by 3.8% in the euro area. This considerable decline is " one of the largest since the start of the time series in 1995 ". It followed growth of 0.2% and 0.1% respectively in the fourth quarter of 2019 in these two geographic areas. The last such marked drop in GDP took place between the end of 2008 and the beginning of 2009, during the financial crisis. In comparison, US GDP fell 1.2% in the previous quarter.
France is at the bottom of the pack, experiencing a decline of 5.8% this quarter, more marked than that of its neighbors. This Friday, the German institute Destatis published its growth estimates for the first quarter and explained that the epidemic hit " the German economy hard ". The country has experienced its largest decline since 2008-2009, and " the second largest decline since German unification ". Strongly dependent on the international economic situation and on exports, Germany now expects a drop in its GDP of around 6.3%, the most marked since the start of the statistical series fifty years ago.
Estimates of growth in Europe, in the first quarter of 2020 Eurostat, Le Figaro
At the same time, the Dutch Central Statistical Office (CBS) reported a 1.7% drop in national GDP in the first quarter, largely due to a decline in household consumption. Again, this is the steepest drop since the 2008 crisis. In a statement, the CBS described a " mixed " quarter , during which the economy continued to grow, but " since the second half March, the global coronavirus epidemic and related measures caused an unprecedented decline in economic activity . ” In Portugal, the Institute of Statistics (INE) described a fall in GDP of 3.9% over a quarter, which can be explained by a drop in exports, tourist activity and consumption.
However, keep in mind that the confinements had only just begun, in the first quarter. The most massive effects are rather expected in the second quarter, between April and June. These estimates should therefore only be a taste of the coming crisis.
Consequences on employment and trade
At the same time, Eurostat also reviews the consequences of these economic difficulties on employment. Overall, " the number of employed people fell by 0.2% in both the euro area and the EU in the first quarter of 2020 compared to the previous quarter, " comments the institution. It was the first decline in seven years. In the coming weeks, the unemployment rate in the Union should jump: the Commission predicts that it will drop from 6.7% in 2019 to 9% in 2020, before falling to 7.9% the following year . In France, the rate would drop, in three years, from 8.5% to 10.1% then 9.7%.
One of the causes of these troubles is detailed in another note from Eurostat, published the same day: in March, confinement requires, exports from the euro zone to the rest of the world decreased by 6.2% compared to the same month a year earlier, standing at 193.3 billion euros. Imports, meanwhile, fell 10.1% to 165 billion euros. These developments have enabled the eurozone to present a large trade surplus, of around 28.2 billion euros, up 5.5 billion euros compared to March 2019. Trade in within the zone are also down, by 12.1%, amounting to 153.3 billion euros.
Variation in trade Eurostat, Le Figaro
Across the European Union, the variations are more marked: non-European exports decreased by 10.2% in March 2020 compared to the same month a year earlier, when imports fell by 12.2 %. In total, the Twenty-Seven have a trade surplus of 22.2 billion euros. Intra-European trade fell “ only ” by 7.9%. In 2020, the Union notably reduced its trade deficit vis-à-vis China, Russia and Norway, while it increased its surplus vis-à-vis the United States.