Countries in Europe sharing the euro currency slipped into a technical recession in the first quarter of the year, as they were hit hard by the global pandemic.
The eurozone economy declined by 0.6 per data showed this week, to confirm a technical recession, as gross domestic product contracted in all larger countries except France.
According to the news agency Reuters, the European Union’s statistics office Eurostat said GDP in the 19 countries sharing the euro fell 0.6 per cent quarter-on-quarter in the Jan-March period, for a 1.8 per cent year-on-year fall.
The figures were in line with the initial estimate on April 30. Together with the GDP decline in the fourth quarter of 2020, of 0.7 per cent in the quarter and 4.9 per cent from a year earlier, the euro zone was in its second technical recession since the COVID-19 pandemic began.
The economies of Germany, Italy, Spain and the Netherlands all contracted. France’s grew by 0.4 per cent quarter-on-quarter.
Eurostat also said that employment fell 0.3 per cent on the quarter in the first three months of 2021 after a 0.4 per cent quarterly rise in the previous quarter. This equated to a 2.1 per cent year-on-year decline.
In separate release, Eurostat showed imports from Britain were down by more than a third in the first quarter of 2021 following the UK’s departure from the EU single market.
The 27-nation bloc’s trade surplus with Britain rose to 35.8 billion euros ($43.73 billion) as exports were down by a more modest 14.3 per cent. The decline in exports and imports was most marked in January and less acute in March.
Eurostat said the euro zone’s unadjusted trade surplus with the rest of the world fell to 15.8 billion euros in March from 29.9 billion euros in March 2020.
Adjusted for seasonal swings, the euro zone trade surplus with the rest of the world was 13.0 billion euros in March from 23.1 billion euros in February as exports fell 0.3 per cent on the month while imports rose 5.6 per cent.
There was better economic news for the UK as better-than-expected GDP figures showed that the economy proved resilient through the second wave of the coronavirus pandemic, growing strongly in March and contracting only 1.5 per cent in the first quarter of 2021.
The official figures suggested a brighter outlook for the economy over the summer after the recovery from the impact of the pandemic accelerated over the spring.
However, the US dollar continues to be weighed down by disappointing jobs data and fears over inflation, while it has been another volatile week for bitcoin.
Despite predictions of almost a million new US jobs being created in April, US government figures recorded only 266,000.
Fears also rise over inflation in the US, with fresh new Producer Price Index (PPI) data on Thursday showing a year-on-year rise of 4.2 per cent against an expectation of 3.6 per cent.
For the moment, the Federal Reserve (Fed) continues to call the rise in inflation “transitory” as the economy reopens.
The markets think differently and see the possibility of interest rate rises coming sooner than initially expected.
Stocks fell and bond yields rose, as the dollar dropped to open this week at £0.71 and €0.82 in value – down from £0.72 and €0.83 at the start of the month.
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