After collapse, Eurozone economy starts slow recovery

According to the EZEO, the growth in the third quarter will be 8.3%

Economic output in the euro area suffered a sharp plunge in the second quarter, which is now being followed by a slower recovery, shows the Eurozone Economic Outlook (EZEO) of the ifo Institute in Munich and KOF in Zurich.

The overall forecast is uncertain because nobody knows how the coronavirus pandemic will continue, how companies’ liquidity situations will develop, and how consumers will behave.

The institutes estimate that the second quarter will see a 12.3% drop over the first quarter, which had already fallen by 3.6%. In the third quarter, the economy will grow by 8.3%, and in the fourth, by a further 2.8%. However, this adds up to a contraction in all goods and services produced of 8.1% for the year as a whole.

In the second quarter, all key figures are in the red: industrial production shrank by 18.9% owing to coronavirus-related shutdowns, private consumption by 11.8%, and investment by 15.4% quarter over quarter.

In the third quarter, after the restart, industrial production will rise by 14.7%, and in the fourth quarter by 2.7%; on balance, this amounts to minus 11.3% for the full year. The other key figures are similar.

Prices will fall by 0.9% in the third quarter but will rise by 0.3% in the fourth quarter, equating to 0.0%.

Italy’s Istat statistical office did not participate in the Eurozone Economic Outlook for the second quarter.


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