Both the euro area and the EU economies have declined as expected

The euro area economy contracted as expected in the first quarter of 2021. After adjusting for seasonal effects, the region's gross domestic product (GDP) fell by 0.6 percent quarter on quarter in the first three months of the year. Across the 27-member European Union (EU), it fell by 0.4 percent. Preliminary data from Eurostat, the EU's statistical office, showed this on Friday. These declines follow a quarter-on-quarter decline in GDP in the previous fourth quarter of 2020 of 0.7 percent in the euro area and 0.5 percent across the Union. This means that both blocs fell into recession again, the second within a year. The reason was blockades to stop the COVID-19 pandemic, which hit the service sector hard in particular. By way of illustration, in the third quarter of 2020, euro area GDP grew by as much as 12.5 percent quarter on quarter and the EU by 11.7 percent after its sharp fall in the previous quarter by 11.6 percent in the Euroregion and 11.2% across the Union, which was the largest since the beginning of these statistics in 1995. Year-on-year, seasonally adjusted euro area GDP declined by 1.8% in the first quarter of 2021 and by 1.7% across the EU after declining by 4.9% in the Euroregion and 4.6% in the Union over the previous three months. Among the Member States for which Q1 data were available to Eurostat, the sharpest quarter-on-quarter decline in GDP was recorded in Portugal (-3.3%), followed by Latvia (-2.6%) and Germany (-1.7%). Conversely, the largest increases were reported by Lithuania (1.8%) and Sweden (1.1%). Year-on-year, GDP declined in the first quarter in all countries except France, where it rose by 1.5%, and Lithuania (1%).