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Eurozone economy slumps 0.6 per cent in first quarter of the year

Gulan Media April 30, 2021 News
Eurozone economy slumps 0.6 per cent in first quarter of the year
Brussels (dpa) - Eurozone gross domestic product (GDP) contracted by 0.6 per cent in the first three months of the year compared to the previous quarter, the EU statistical office estimated on Friday.

Economic output for the euro currency area was down 1.8 per cent from the same period in 2020, Eurostat said.

For the whole 27-member European Union, the contraction was slightly less pronounced at 0.4 per cent quarter on quarter, and 1.7 per cent year on year.

The decline continues a downward trend seen in the final months of 2020. This came after a strong rebound from the economic havoc wreaked by the pandemic seen in the third quarter of that year.

The economic contraction coincides with the sluggish start to the roll-out of vaccinations across the bloc. Last year some countries expressed hope that they would be able to lift most restrictions in spring. However, they have largely been unable to do so with coronavirus infections having drastically increased in many EU member states at the beginning of the year.

Vaccination rates across the bloc have increased in recent weeks, however. About 22.93 per cent of the EU population has received at least one shot, according to platform Our World in Data.

Portugal recorded the highest GDP decrease at 3.3 per cent compared to the previous quarter, followed by Latvia with a slump of 2.6 per cent. Germany's economy contracted by 1.7 per cent, according to Eurostat, which Oxford Economics called the "main negative surprise."

Not all countries saw their economies shrink compared to the last months of 2020. Lithuania's economy, for example, grew by 1.8 per cent compared to the last quarter of the year, and by 1 per cent year-on-year.

Overall, Oxford Economics, which specializes in forecasting, said they expected the economies to recover over the year when an increasing proportion of populations have been vaccinated.

"We see activity rebounding steadily this year, in parallel with a strong pick-up in vaccine roll-outs and the gradual relaxation of restrictions," the organization said.

Eurostat's first estimate is subject to revision, with not all countries having reported their economic data, the Luxembourg-based office noted.
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