In the third quarter, Europe witnessed a record growth in GDP. The region now under the risk of entering recession as restrictions impose to curb the second wave of Coronavirus. These restrictions might put an end to its delicate recovery.
The Gross Domestic Product of EU, between July to September saw a massive surge of 12.1%. This surge seen in the 19 countries that use euro as its currency. In the second quarter, huge expansions seen in this area since 1995.
?But the economy of EU is still about 4% smaller than it witnessed towards the end of September 2019. The analysts feel that this recovery will short-lived.
According to Andrew Kenningham, the rise in GDP would have been a cause for celebration in any other occasion. But the second wave of the pandemic might push the entire area into a double-dip recession.
Germany and France have already announced nationwide lockdowns due to the Coronavirus, shutting restaurants and businesses for weeks. Italy has imposed a partial lockdown, with businesses to shut down at 6pm.
France, after recording a surge of 18.2% has already entered the second phase of the dip, where the areas of recovery seem dim.
Only certain businesses, like manufacturing and construction, and schools will remain active in France and Germany in this period. These will to some extent make up for the decline in GDP. Economies are already in despair for failing to recover in the second quarter of the year. This means that if the GDP falls further, the outcome will be less harsh.
German economy went up 8.2% in July to September, but still 4.2% low compared to the previous year. Similarly, the Spanish economy went up 16.7%, which is still 8.7% lower compared to 2019. Also, Italian economy saw a rise of 16.1%, which is 4.7% below the previous year.
The European business activity already declining before the lockdowns imposed.
The President of the European Central Bank stated that the bank was ready to support the economy and all possible tools are under examination. The Governments might also be required in increasing their spending in this factor.
Although, the employment rate of EU was at 8.3% in September, the labour market might still be under tremendous strain in the following months.