The European zone economy reportedly contracted in the first quarter of 2021 with EU countries implementing restrictions and movement control amid the spread of Covid-19 infection.
European Union (EU) gross GDP fell 0.6% based on data released by the European Department of Statistics, Eurostat.
These data mark a contraction for the second consecutive quarter. Indirectly it illustrates that the EU economy is still in danger.
A large number of the largest economies in the EU such as Germany, Italy and Spain showed a decline in activity during the first three months of the year. The most significant drop in activity occurred in Portugal which is facing a new wave of Covid cases and resulted in a second lockdown measure having to be taken.
In Italy, the latest GDP figures showed a 0.4% decline for the quarter, slightly better than expected. The Spanish economy also shrank over the same period, by 0.5%, while Portugal’s economic activity declined by 3.3%.
Even so there were countries that recorded positive readings such as France which recorded better -than -expected growth of 0.4% in the first quarter. While the French economy is still below pre-Covid levels, these growth figures will boost confidence during the second quarter. French consumer spending also rose 0.3% in the first quarter, despite the reintroduction of certain Covid restrictions.
For example, economists are still confident that the EU economy will grow well in 2021. With a more vigorous vaccination program in the second quarter, many economists expect that growth will be faster.
