Europe’s economy cracked under the pressure of lockdowns to stem the spread of the coronavirus, giving way to declines far more severe than the record-breaking contraction in the United States.
The eurozone’s gross domestic product plunged 40.3 percent on an annual basis, far exceeding the 32.9% contraction in the U.S. economy over the same period, according to data released Friday. On the quarterly basis customarily used in Europe, the economy declined 12.1 percent—which compares with the stand alone quarterly decline of 9.5 percent in the U.S.
A day earlier, German authorities said their country’s GDP fell by 10.1 percent for the quarter, which is 34.7 percent on an annual basis.
The lockdowns were more severe in France and Italy, largely because authorities were late to react to surges in coronavirus deaths, and weighed more heavily on their economies. Italy’s GDP fell by 12.4 percent for the quarter. France’s fell by 13.8 percent.
“GDP’s negative developments in first half of 2020 is linked to the shutdown of ‘non-essential’ activities in the context of the implementation of the lockdown between mid-March and the beginning of May,” the French economics statistics agency said in a statement.
The agency also revised the first-quarter data to a 5.9-percent contraction from the 5.3 percent it had previously estimated. France’s economy has now contracted for three consecutive quarters.
Spain’s GDP contracted 18.5 percent compared with the prior quarter. Austria’s fell 10.7 percent. Belgium’s GDP sank 12.2 percent. Portugal’s economy sank 14.1 percent.
European governments typically report their economic growth as a change in GDP from the prior quarter. The United States, on the other hand, reports an annualized change from the prior quarter, which means the figure is an extrapolation of what would happen if the economy grew or contracted at the same rate for a full year. Except where noted, this article uses the European method to report GDP growth.
A third way of measuring growth or contraction is to compare the economy’s output from the same quarter one year ago. On this basis, the U.S. economy shrank 9.5 percent. Germany’s shrank 11.7 percent. France’s economy shrank 19 percent. Spain’s 22.1 percent. Belgium’s 14.5 percent. Italy’s 17.3 percent. Austria’s 13.3 percent.
The Eurozone economy overall was 15 percent smaller than a year ago.
The eurozone’s unemployment rate climbed to 7.8 percent in June from a low of 7.2 percent earlier this year, much lower than the 11.1 percent unemployment rate in the U.S. Many European workers are protected by job protection schemes run by the government, including job-furlough programs in which the government pays employers to keep workers on the books.
Most economists think that Europe’s economy has begun to recover, and may even have started pulling ahead of the U.S. in recent months thanks to new surges of the virus in the U.S. But few expect that Europe’s full-year growth rates in 2020 will exceed the U.S.’s given the severity of the European contraction.
The deep contractions across undermines the claims by Americans such as CNN anchor Chris Cuomo and many Democrat officials that the U.S. economy has suffered because of the way President Donald Trump has handled the pandemic. On Thursday, Cuomo falsely claimed Trump’s leadership had resulted in the U.S. economy shrinking more than the German economy.
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