Frankfurt: Europe’s economy shrank 0.6 per cent in the first three months of the year as slow vaccine rollouts and extended lockdowns delayed a hoped-for recovery – and underlined how the region is lagging other major economies in rebounding from the coronavirus pandemic.
The fall in output for the 19 countries that use the euro currency was smaller than the 1 per cent contraction expected by economists but still far short of the rebound underway in the United States and China, two other pillars of the global economy.
Figures announced Thursday showed the US economy grew 1.6 per cent during the first quarter, with business supported by strong consumer demand. On an annualised basis, the US grew 6.4 per cent.
In Europe, the second straight quarter of falling output confirms the region is in a double-dip pandemic recession after a rebound in growth in the third quarter. Two quarters of falling output is one definition of a recession.
France showed unexpected growth of 0.4 per cent compared to the quarter before, while the main negative surprise came in Germany, the continent’s largest economy. Activity there shrank by a larger-than-expected 1.7 per cent as the manufacturing sector was hit by disruption of parts supplies on top of the hit to services and travel from pandemic-related restrictions on activity.
French authorities are anticipating the COVID-19 outlook in the country to be better next month, when a greater proportion of the population will be vaccinated. The government is slowly starting to lift partial lockdowns, despite still-high numbers of coronavirus cases and hospitalised COVID-19 patients.
President Emmanuel Macron said Thursday that the outdoor terraces of France’s cafes and restaurants will be allowed to reopen on May 19 along with museums, cinemas, theaters and concert halls under certain conditions.
Worry about a potential second straight lost vacation season has clouded the outlook for Mediterranean countries Italy, Spain and Greece, which rely heavily on tourism.