Eurozone economy suffers record drop during lockdown months

  31 July 2020    Read: 652
Eurozone economy suffers record drop during lockdown months

The economy of the 19-country eurozone shrank by a devastating 12.1% per cent during the second quarter from the quarter before as coronavirus lockdowns froze business and consumer activity. It was the largest drop on record.

Spain, which suffered a severe virus outbreak that devastated its tourism industry, was the hardest hit with a 18.5% drop. Italy and Portugal were also hard hit but no country escaped. It was the biggest decline since the records started in 1995.

The decline in Europe compares to a 9.5% quarter on quarter decline for the United States.

European governments are countering the downturn with massive stimulus measures at the national and European Union level. EU leaders have agreed on a 750 billion-euro recovery fund backed by common borrowing to support the recovery from 2021.

National governments have stepped in with loans to keep businesses afloat and wage support programs that pay workers salaries while they are furloughed. The European Central Bank is pumping 1.35 trillion euros in newly printed money into the economy through bond purchases, a step which helps keep borrowing costs low.

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