The euro area economy contracted in the fourth quarter of 2020

The euro area economy contracted in the fourth quarter of 2020. The gross domestic product (GDP) of the region decreased by 0.7 percent quarter on quarter in the period from October to December 2020, after adjusting for seasonal effects. This was stated on Tuesday by the European statistical office Eurostat in its preliminary estimate.

They predicted a worse result

Across the European Union, GDP fell by 0.5 percent quarter on quarter. However, analysts predicted an even worse result for the eurozone, a quarter-on-quarter decline in GDP in the last three months of last year by one percent. Renewed blockades to halt the spread of a new coronavirus pandemic imposed by many bloc states in the fall have contributed to the decline in GDP. They reversed the strong recovery in GDP growth in the third quarter of 2020, by 12.4 percent quarter on quarter in the euro area and by 11.5 percent in the EU, after its sharpest decline in the history of statistics in the second quarter of 2020 (-11.7 percent in the euro area and -11.4 percent in the EU). In a year-on-year comparison, the seasonally adjusted GDP of the Euroregion decreased by 5.1 percent in October-December 2020, after declining by 4.3 percent in the previous quarter. And in the case of the EU, it fell by 4.8 percent (-4.2 percent in the third quarter).

Austria fell the steepest

Among the EU Member States for which data were available to Eurostat for the fourth quarter, Austria (by -4.3 percent) saw the sharpest quarter-on-quarter decline in GDP, followed by Italy (-2%) and France (-1.3%). Conversely, the largest growth was reported by Lithuania (1.2%) and Latvia (1.1%). In a year-on-year comparison, all EU countries showed a decline in GDP in the last three months of 2020. For the whole of 2020, euro area GDP, after adjusting for seasonal and calendar effects, fell by 6.8 percent and the Union as a whole by 6.4 percent. The European Commission predicted a decline in the eurozone's economy for the whole year by 7.8 percent. However, preliminary indicators signal that 19 Euroregion countries are facing the prospect of a recession, as new blockades, which halted the brief recovery of their economies last summer, continue and even tighten.