Eurozone braced for record 15.6pc plunge in growth after damaging lockdown period
THE scale of the economic carnage unleashed across the eurozone by Covid-19 lockdowns will be laid bare this week as experts brace for a recordbreaking collapse in growth.
City economists forecast a dramatic 15.6pc plunge in growth between April and June, four times deeper than the 3.6pc slide in the first quarter, which was itself a record for the 19-member currency bloc.
The overall slump will disguise varying fortunes, with Germany faring best. The eurozone’s biggest economy imposed less restrictive measures than other member states and has a bigger manufacturing sector less vulnerable to shutdowns. Peter Schaffrik, head of economic research at investment bank RBC, said: “The way the lockdown operated is that the nations which had a larger share of services like France were affected more. That is one of the reasons why Germany comes out slightly better.”
Weaker nations such as Greece, Spain and Portugal are particularly exposed due to their higher reliance on tourism, which came to a halt as the pandemic struck and is set to suffer another hit as fears grow of a second wave, particularly in Spain. Tourism accounts for 14pc of Greece’s economy and 12pc in Spain and Portugal, investment bank Jefferies said.
Oxford Economics expects German growth to retreat by a “relatively benign” 9pc, with France suffering a 16pc fall and Spain the biggest casualty in the region with an 18pc collapse.
Angel Talavera, Oxford’s head of European economics, said: “Failure to control the epidemic would be a major blow for the recovery expected during the summer months, especially in countries highly reliant on tourism.”
Although more timely data shows some signs of a private sector recovery in July, retail spending has tailed off, and financial data firm IHS Markit has warned of a slump in employment across the eurozone. The European Central Bank has launched a €1.35 trillion (£1.23 trillion) money-printing campaign and is offering cheap loans to banks. Politicians agreed a €750bn rescue fund to help the worst affected countries after a summit last week.